TIGERS ON THE PAPERS: NEW METHOD OF GDP CALCULATION, BY THE CSO

ESSAY FODDER—the hindu

 IMPROVED FIGURES ATLEAST ON THE PAPERS:

A new methodology, unveiled toward the end of January by the CSO, presented a rosier picture of the Indian economy than previously imagined.

 It, for instance, indicated a growth in gross domestic product of 6.9 per cent in 2013-14, quite a jump from the 4.7 per cent estimated earlier.

One change made relates to the base year, on which comparisons are made. [2011-12, PREVIOUSLY 2004-05]

Two, there is now an attempt to capture value addition, rather than growth through volumes, in the calculation of the Gross Domestic Product (GDP).

Three, data from newer, more sophisticated corporate databases have been used.

Four, GDP will be measured at market prices, by adding taxes to and reducing subsidies from what used to be the main measure till now, GDP at factor cost.

All these changes, many experts acknowledge, are important for Indian metrics to match international ones.

The high growth projection of 7.4 per cent for 2014-15 somehow seems out of sync with low industrial production, poor corporate performance and less-than-expected tax collections.