The economic growth rate was Friday revised upwards to 6.9 percent for 2013-14, as against 4.7 percent estimated earlier, after the government updated the base year for measuring national accounts.
The higher growth rate, however, may not provide any cushion on the fiscal deficit front as size of economy has shrunk to Rs 113.45 lakh crore following the revision.
The Gross Domestic Product (GDP) growth rate for 2013-14 has gone up following adoption of the new series with base year 2011-12. The rate of expansion was estimated at 4.7 percent under the old series that had 2004-05 as base year.
The base year was last revised in January 2010 and goes under revision every five years.
Besides, government also introduced the new concepts like Gross Value Added (GVA) to the economy. Changes are aimed at improving the “ease of understanding (data) for analysis and facilitate international compatibility”, said a release.
Similarly, the economic growth rate for 2012-13 has been revised upwards to 5.1 percent from earlier estimate of 4.5 percent. The previous estimates had put economic growth rate at sub-5 percent level for the past two years.
On impact of the new data on fiscal deficit, which is calculated as a percentage of the GDP, Chief Statistician T C A Anant said: “The size of economy has marginally declined to Rs 113.45 lakh crore in 2013-14 under the new series from Rs 113.55 lakh crore (under the old series).”
Similarly, the size of the economy in 2012-13 declined under the new series to Rs 99.88 lakh crore from Rs 101.13 lakh crore at current market prices.
The government is committed to meeting the fiscal deficit target of 4.1 percent of the GDP in 2014-15 and its task might become tougher if the trend continues.
Anant further said, “The government targets fiscal deficit as a proportion of the GDP at current market prices.”
Although the Centre by the end of December has overshot the fiscal deficit target for the current financial year, the Coal India disinvestment, fetching the exchequer Rs 22,577 crore, will provide some comfort to government which is racing against time to keep the deficit in check.
After changing the base year, India’s per capita income — a gauge for assessing standard of living — is estimated to have risen to Rs 6,699 per month in 2013-14 from earlier estimate of Rs 6,198.33.
About the impact of revision on India’s ranking on the basis of size of economy, Anant said, “Our ranking in GDP terms will not change as the size of economy has almost remained same.”
According to the statement, the new series will also affect a wide range of indicators like trends in public expenditure, taxes and public sector debt that are conventionally analysed in terms of their ratios to nominal GDP.
However, the release said, the level of revision in the present base revision “is not large enough to affect any of these ratios significantly”.
Moreover, the official press note said that the Gross Domestic Product (GDP) at factor cost will no longer be discussed, instead Gross Value Added (GVA) will be analysed in releases.
“As is the practice internationally, industry-wise estimates will be presented as GVA at basic prices, while GDP at market prices will henceforth be referred to as GDP.
“Real GDP or GDP at constant (2011-12) prices stands at Rs 92.8 lakh crore and Rs 99.2 lakh crore, respectively for years 2012-13 and 2013-14, showing a growth of 5.1 percent during 2012-13, and 6.9 percent during 2013-14,” it added.
Under the new series, estimates of value added are compiled separately for crops and livestock sector. The estimation of sand excavation is also factored indirectly on the basis of output of construction sector.
The new series also includes intellectual property products as an asset. Under the new series, the Consumer Price Index (CPI)-Rural/Urban/Combined is used instead of CPI-Industrial Workers and CPI-Agricultural Labour.
During 2013-14, contribution of agriculture sector has declined marginally to 18.2 percent in new series from 18 percent with 2004-05 as base year.
Similarly, the share of mining and quarrying increased to 2.8 percent from 2.1 percent. The share of manufacturing sector too jumped to 17.3 percent from 12.9 percent.
The contribution of trade, repair, hotels and restaurants has come down to 12 percent in 2013-14 from 16.5 percent under the old series.
The share of social and personal services declined to 12.9 percent from 14.9 percent. The contribution of transport, storage, communication and services related to broadcasting too declined to 6.6 percent from 7.5 percent.
PTI