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Gross Domestic Product from Services Sector

This paper deals with the methodology and data sources used for estimating gross value added from different categories of services, especially from the unorganised sector. The GVA estimates are first obtained for the benchmark year as a product of workforce estimate with the GVA per worker. These are moved forward to get the corresponding values for subsequent years by making use of physical and price indicators. In this paper we discuss the problems in getting the estimates of workforce for the base year. In most cases consumer price indices are used to estimate GVA per worker at current prices. It also discusses the problems relating to the use of physical indicators. Some suggestions for improving the estimates are given.

Gross Domestic Product from Services Sector

Methodology, Data Sources, and Limitations

This paper deals with the methodology and data sources used for estimating gross value added from different categories of services, especially from the unorganised sector. The GVA estimates are first obtained for the benchmark year as a product of workforce estimate with the GVA per worker. These are moved forward to get the corresponding values for subsequent years by making use of physical and price indicators. In this paper we discuss the problems in getting the estimates of workforce for the base year. In most cases consumer price indices are used to estimate GVA per worker at current prices. It also discusses the problems relating to the use of physical indicators. Some suggestions for improving the estimates are given.

M R SALUJA, BHUPESH YADAV

I Introduction

T
he contribution of the service sector to gross domestic product (GDP) has grown at a much faster rate than the economy as a whole. The growth has been tremendous in transport other than railways, communications, and business services, especially software and financial services. It has become essential to understand the sources of data and the methodology used for estimating gross value added (GVA) from different categories of services. In almost all cases the GVA estimates are prepared separately for the public sector, private corporate sector and private unorganised sector. The estimates for the public sector are based on the budget documents and the annual accounts of the different enterprises. For the private corporate sector the estimates are based on the company finances studies conducted by the Reserve Bank of India on sample basis. For the unorganised part of the private sector the estimates are prepared for the benchmark year by using the income approach, i e, by multiplying the GVA per worker with the workforce. The benchmark estimates are carried forward by making use of relevant physical and price indicators. The workforce estimates are prepared separately for rural and urban areas by making use of population census data and employment and unemployment surveys (EUSs) of the National Sample Survey Organisation (NSSO). The estimates of workforce for the unorganised parts of various services are obtained as residual after subtracting the estimates of the workforce of the public and private corporate sector from the corresponding estimates of the entire sector. It may be mentioned here that there are limitations in the method for estimating GVA from the private corporate sector by making use of sample studies by the RBI on the corporate sector. Also, the estimates of employment in the organised sector are not reliable for establishments employing 10-25 workers, for which the submission of returns is voluntary. The returns in the case of even the public sector are not complete.

Here it may be mentioned that for the series with 1980-81 as base, the GVA for different services was first prepared for the public and private sector for the benchmark year and then the estimates for the private corporate sector, prepared independently using the methodology of the series with 1993-94 as base year, were subtracted from the estimates of the entire private sector to get the estimates for unorganised services (the informal sector).

On February 28, 2006 the series with 1993-94 as base was replaced by the series with 1999-2000 as base. The methodology of estimation of GVA and data sources used are given in the new series of national accounts statistics (NAS) (base year 1999-2000). The method of moving the estimates to other years is given in the brochure issued in March 2006. For agriculture, mining and registered manufacturing the estimates of value added are based on the production approach. The data are available from the sources used for the series with 1993-94 as base. For unregistered manufacturing and other unorganised service sectors the estimates for the base year are obtained as a product of workforce in different activities and GVA per worker mainly based on the follow-up surveys of the economic censuses. For other years, as in the previous series, the estimates of GVA are moved forward by making use of physical and price indicators.

With every change in the base year there is improvement in the methodology of estimation and also in the data availability, especially with reference to the enterprise surveys. A number of research papers have been written to critically review the methodology of estimation of GVA and the data sources. Views have been expressed that the estimates of value added per worker thrown up by enterprise surveys (ESs) used in the compilation of GVA estimates for the unorganised segment are quite low and the services which have come up recently are not captured properly. Also, there are wide variations in the estimates of employment based on different ESs. It may be stated here that the estimates based on EUSs are inclusive of public sector employment while the estimates based on ESs do not cover employment in the public sector. Also, there are conceptual differences between the estimates of employment from the two sets of sources, especially in the case of multiple employment [Kulshreshtha et al 2002]. In this paper a modest attempt has been made to discuss the data sources and the methodology of estimation of GVA along with the problems encountered especially with the unorganised segment. The estimates of number of enterprises and workers based on different ESs and EUSs are given in the Appendix. It is important to note here that estimates of the number of establishments are not directly used for compilation of national accounts, but their comparison over time reflects the quality of the results of the ESs. Even the estimates of absolute number of workers obtained from ESs are not directly used for estimation of GVA. These can be used to compare the estimates based on the EUSs and also between themselves over a period of time. The quality of the estimate of GVA per worker depends on the quality of the estimate of workforce. In the following section we discuss the methodology and data sources for broad service sectors. The next section gives the concluding remarks.

II Methodology and Data Sources

Trade

This sector constitutes an important activity under services. For the public sector, the estimates are based on the budget documents and annual reports of the companies while for the private organised sector the estimates are based on the RBI sample study. For estimating the GVA from the unorganised component, follow-up surveys are used. The first follow-up survey for trade was undertaken with reference to 1979-80 followed by 1985-86, 1990-91 and 1996-97. These surveys were undertaken separately for the own account and non-directory enterprises and directory establishments by the NSSO and CSO respectively. The survey on informal non-agricultural enterprises was conducted by the NSSO with reference to 1999-2000. This survey covered the trade sector also. The number of enterprises and workers based on the follow-up surveys and from other sources are given in Table 1.

According to the CSO, the data obtained for own account enterprises (OAEs) and non-directory trade establishments (NDTEs) were not reliable and thus GVA per worker based only on the directory trade establishments (DTEs) 1979-80 were taken into account for the series with 1980-81 as base. (These were later replaced by the DTE survey 1985-86.) The GVA per worker estimates were multiplied with the workforce estimates, separately for the rural and urban areas, to get the GVA estimates for the base year (1980-81). The estimates were prepared separately for the public and private sectors. The estimates for the private corporate sector were independently prepared (based on the RBI study) and subtracted from the estimates for the entire private sector to get the estimates for the unorganised private sector. This division was necessary for estimating the GVA for the later years for unorganised trade.

For the series with 1993-94 as base year the estimates were prepared separately for the organised and unorganised private sectors. The methodology for the public and the private organised sector estimation remained the same. For the unorganised sector the GVA was estimated by taking the GVA per worker from the DTE survey 1990-91, separately for rural and urban areas, and the corresponding workforce estimates. (For the NAS 2000 and onwards, the GVA per worker was taken from the DTE 1996-97 survey and survey of NDTEs and OAEs conducted with reference to 1997. However, the GVA per worker estimates only of NDTEs were used. Probably the estimates from OAEs were not considered reliable.) The workforce estimates for rural areas were taken as such and from the total urban workforce estimate, the estimates of the public and private corporate sector (based on the Directorate General of Employment and Training, DGE&T) were subtracted to get the estimates for the unorganised sector. It may be mentioned here that the GVA from the trade sector for 1993-94 given in NAS 1999 (before shifting GVA per worker to 199697 and the 1997 survey) was Rs 1,05,576 crore while that given in later NAS (after shifting) was Rs 93,206 crore. A similar decline was seen during later years.

The annual estimates of the public and private corporate sectors were based on the current data (with limitations in the case of the private corporate sector) while for the unorganised sector the benchmark estimates were carried forward by using a specially constructed gross index of trading income (GTI). This index has a number of problems: (1) The market share ratios are based on very old data. (2) These shares relate to the entire trading activity and not only the unorganised part. Because reliable estimates of marketing surplus are not available and also it is not easy to compile the estimates every year, annual estimates should be based on some index like the

Table 2: Estimates of GDP from Other Transport for 1999-2000 (Rs crore)

1993-94 Series New Series

1 Road transport 61318 68139
a) Mechanised road 55665 58332
b) Non-mechanised road 5654 9807
3 Water transport 11320 3728
4 Air transport 4425 3451
4 Services incidental to transport 5848 8038
Total (unadjusted for FISIM) 82911 83356
FISIM 1056 979
Total – net of FISIM 81855 82377

Table 1: Number of Establishments and Employment Based on Various Sources (in hundreds)

1979-80 Enterprise Surveys 1985-86 1990-91 1997 1999-2000 Economic Census 1990 1998
Small trading No of establishments Employment Directory establishments No of establishments Employment Total establishments Total employment 59349 89938 4075 63424 89938 98270 159577 1995 16315 100265 175892 139082 219298 1772 14107 140854 233405 145044 221522 1432 11895 146476 233417 168477 287800 88508 150297 114142 205016
Economic and Political Weekly September 15, 2007 3733

combined GVA of the agriculture and industry sectors. While comparing the estimates based on the DTE survey, the number of establishments continuously decreased from 1985-86 to 1990-91 and then to 1996-97. Similar was the case with the workforce. On the other hand there was substantial increase in the number of enterprises and workers from 1979-80 onwards up to 1990-91 in the NDTEs and OAEs. Between 1990-91 and 1997 the number of enterprises increased only by 4 per cent while the increase in the number of workers was about 1 per cent only. Since the major part of trading is in the small sector, for the entire trade sector too the growth in the number of enterprises was only slightly less than the growth in the NDTE and OAE components. The estimates of the number of workers were exactly the same for the two surveys, i e, there was no growth in seven years. In the workforce also in the specially conducted enterprise survey (SES) during 1998-99, the number of workers was almost the same as that of the enterprise survey 1996-97. On the other hand if we see the workforce from the EUSs conducted by the NSSO during 1993-94 and 1999-2000, the workforce in the trade sector increased from 2,71,25,000 to 3,28,82,000, an increase of 21 per cent.

According to the economic censuses (EC) 1990 and 1998 the number of workers in the trade sector is 1,50,30,000 and 2,05,01,000 with corresponding establishments as 88,50,834 and 1,14,14,250 respectively. That means the estimates based on the EC, which include the public sector also, are much on the low side. The estimates of workforce from different sources vary widely. A survey on informal non-agricultural enterprises was conducted during 1999-2000 by the NSSO. The survey corresponds to the entire activity of a sector minus the public sector and private organised sector (according to NAS). According to this survey the number of enterprises was 1,68,48,000 and the number of workers was 2,87,80,000. The employment estimate based on this survey is 23.3 per cent more than the estimate obtained for the entire private trade sector based on the 1996-97 ES survey. Another survey on the service sector was done during 2001-02, in which, for reasons unknown, trade and financial services were not covered.

For the series with 1999-2000 as base the trade sector has been divided into five categories: (1) maintenance and repair of motor vehicles (new item), (2) sale of motor vehicles, (3 wholesale trade, (4) repair and sale of household goods (new item), and (5) retail trade. The estimates for categories (1), (2) and (4) have been prepared separately and categories (3) and

(5) combined. The contribution of the unorganised sector has been estimated as a product of workforce and GVA per worker based on the NSS survey of the informal sector for the year 1999-2000. Due to the change in the series, the GVA of items included in the series with 1993-94 as base has come down from Rs 2,29,004 crore to Rs 2,15,169 crore. The difference between the two is only 6.4 per cent. The workforce

IFMR – AD

estimate used in this series is much more than the estimate number of workers and the GVA per worker in each activity
provided by the EUS 1999-2000. of transport. The series with base 1993-94 has been replaced
by the series with 1999-2000 as base. The activities of transport
Hotels and Restaurants are divided into the following five divisions:
(1) mechanised road transport, (2) non-mechanised road
In the series with 1980-81 as base, the estimates for the transport, (3) air transport, (4) water transport, and (5) services
public sector were based on the analysis of accounts of public incidental to transport.
sector undertakings. For the private sector, the estimates were In the case of mechanised road transport the value added per
taken from the enterprise survey as such and moved to 1980-81 worker (VAPW) is estimated for the benchmark year by mak
by making use of the GTI. The estimates for the private cor ing use of ESs and moving these forward by making use of
porate sector were deducted to get the estimates for the unor consumer price index (CPI) numbers for urban non-manual
ganised private sector. For the series with 1993-94 as base, the employees (UNME). The number of workers for the base year
methodology has been modified as in the trade sector using are estimated (for all sectors) by making use of population
1988-89 ES results. census data and EUS data. These are moved forward by mak-
NAS 1999 is based on the ES 1988-89 and NAS 2000 on a ing use of number of vehicles under each group, i e, buses,
similar survey for 1993-94. Because of using different sources trucks and other mechanised vehicles. Here the assumptions
the GVA from this sector for 1993-94 increases from Rs 5,419 are that GVA per worker in real terms remains the same over
crore to Rs 6,163 crore. This change may be because of difference the period. Also the rate of increase in the value addition is
in the results for the two surveys or because of the GTI going the same as the increase in the abovementioned CPI.
in different directions. Incidentally, the estimate for the same The activity of non-mechanised transport consists of non
year for the series with 1980-81 as base was Rs 5,861 crore. mechanised road transport, unorganised water transport and ser-
The method used for the series with 1999-2000 as base is the vices incidental to transport. For the base year the sources are the
same as for the series with 1993-94 as base. There is difference same as mentioned in the case of mechanised road transport for
only in the sources for workforce and value added per worker. GVA per worker and workforce. The constant price estimates of
Because of the changes in the sources and also because of using GVA for non-mechanised road transport and inland water transport
the GTI for estimating the GVA for 1999-2000 with 1993-94 as (private) are carried forward by making use of a weighted volume
base, the GVA for 1999-2000 is 35 per cent more in the latest index of manufacturing and agricultural production and current
series than that in the series with 1993-94 as base. price estimates are obtained by multiplying the constant price
Also, there are wide differences in the employment from estimates with the CPI numbers for industrial workers. The constant
different sources (see the Appendix). Employment from the price estimates and hence the current price estimates worked out
2001-02 survey is 50,89,000 compared to 42,68,000 from EUS this way may not be reliable.
1999-2000. The EUS covers the public sector also. Also from The methodology of estimation is the same in the new series
ES 1999-2000, the employment in the informal sector alone as well as series with 1993-94 as base except for the estimation of
is almost equal to the employment from the EUS, which cov services incidental to transport. In this component there is
ers all the segments of the sector. Therefore, the workforce change in the source of data as well as the content of the sec
based on the EUS, which is used for estimating GVA from tor. The economic activities of the Airport Authority of India
this sector, is on the low side. In fact the workforce estimate included in air transport and services incidental to water trans
used by the CSO for the series with 1999-2000 as base is more port in water transport in the 1993-94 series have been shifted
than the estimate based on the EUS (48,12,000 against 42,61,000 to services incidental to transport in the new series. Although
in EUS 1999-2000). Table 4: Estimates of GVA in Other Transport Components for
Transport Other Than Railways 1993-94 Given in Different NASs (Rs crore)
The estimates of GVA for the public sector are obtained by NAS 1998 NAS 1999 NAS 2000
analysing the annual reports of non-departmental enterprises and budget documents of departmental enterprises. In the case of the private sector the GVA is estimated as a product of Road 29644 30098 22759 Water 3849 4051 5361 Services incidental to transport 3016 3049 2193

Table 3: Number of Enterprises and Employment in Transport Services from Different Surveys (in numbers)

(ES) 1983-84 No of Ent Emp (ES) 1988-89 No of Ent Emp Transport Services (ES) 1993-94 No of Ent Emp EUS 1993-94 Emp EUS 1999-2000 Emp ES 1999-2000(NAE) Emp ES 2001-02 Emp
Scheduled passenger land transport Non-scheduled passenger land transport by motor vehicles Freight transport by motor vehicles Mechanised transport Non-mechanised transport Mechanised + non-mechanised Other transport services 8465 67086 48169 123720 502692 626412 25857 75101 94119 193694 362914 572741 935655 86595 8058 130953 84675 223686 782878 1006564 33902 72453 172333 329827 574613 901800 1476413 106542 14834 293633 202317 510784 1400139 1910923 87314 86640 401937 731668 1220245 1554639 2774884 282510 1511121 1687384 2099319 5297824 2174931 7472755 776614 10662426 757592 4759984 173956 112102 1674768 1331542 3118413 1244815 4363228 1826876
Economic and Political Weekly September 15, 2007 3735

at the aggregate level there is hardly any difference between the estimates for 1999-2000 based on the two series, the estimates for different components differ widely. This is so even after taking into account the change in the contents as mentioned above. This can be noted from Table 2.

Also the workforce estimates based on the 1993-94 and 1999-2000 EUS differ widely. There is 65 per cent increase in the estimates of workers between the two surveys. The estimate of workforce used by the CSO for 1999-2000 is 12 per cent more than even the EUS estimate for 1999-2000.

Even for the series with 1980-81, the methodology adopted was similar to that adopted for the present series. Results of ESs were used for getting GVA per worker.

The estimates of number of enterprises and workers obtained by the different ESs for estimating GVA per worker are given in Table 3.

While looking at Table 3 one finds that the estimates obtained from these surveys are much on the low side and also the growth in employment shown by these surveys is not consistent with the ground realities. In the case of passenger transport by buses, the main employment is still in the public sector and the estimates cannot be compared. In the case of passenger transport by other motor vehicles and freight transport the employment is mainly in the private sector. Even there the estimates cannot be considered reliable. The employment estimate based on ES 93-94 is less than one-fourth of the estimate based on EUS 93-94 for mechanised transport. Even excluding passenger bus transport this is less than one-third. In the case of non-mechanised transport also the ES estimate is less than that of EUS 93-94 although the magnitude of the difference is much less than that in the estimates for mechanised transport. The EUS 1999-2000 estimates available to us are only at threedigit level. Therefore the comparison can be made only at the aggregate level. For mechanised and non-mechanised transport taken together the EUS estimate of employment for 1999-2000 is 42.7 per cent more than the corresponding estimate for EUS 1993-94, the ES 2001-02 estimate is more than double that of ES 1993-94 in the case of mechanised transport, while in the case of non-mechanised transport the ES 1993-94 estimate is more than that of ES 2001-02. Even the CSO estimate of scheduled passenger land transport is less than the corresponding estimate of employment according to EUS 1993-94 or ES 2001-2002. The total mechanised plus non-mechanised transport is much higher than that of ES 2001-02 but less than that of EUS 1999-2000.

Also, in the series with 1993-94 as base, the ES 1988-89 was used in the NAS 1999 and for NAS 2000 the new enterprise survey, i e, ES 1993-94, was used. Because of this there was substantial difference in the estimates given in NAS 1999 and NAS 2000. NAS 1998 gives the series with 1980-81 as base. Since there is no difference in the methodology, the estimates given in NAS 1998 and NAS 1999 are almost the same. This can be seen from Table 4.

Private Communication

Recently there has been a spurt in private communication services like courier services, cable TV operators and cellular and basic telecom services. For the series with 1993-94 as base the estimates were prepared for the entire private communication sector by using the GVA per worker based on ES 1991-92 and workforce estimates worked out for 1993-94. Estimates of GVA per worker were prepared for subsequent years separately for rural and urban areas by using CPI(AL) and CPI(UNME) respectively. Since this sector is a major value addition sector using CPI for getting estimates for annual GVA is not satisfactory. The total GVA of the private sector for 1996-97 was divided into cellular mobile services, courier services and PCOs. The division was done by using the annual reports of the mobile companies and the workforce estimates separately prepared for courier services and PCOs. After 1996-97, the estimates were prepared separately for the three components by making use of annual reports for mobile telephone companies, growth rates in the number of PCOs and annual growth rate in the workforce between 1993-94 and 1999-2000 in the case of courier services.

At present the GVA per worker for all these and other components are available from ES 2001-02 and the workforce estimates are available from EUS 1999-2000. These data have been used for the series with 1999-2000 as base. The GVA estimates have been prepared for courier services, cable operators, and other communication services including PCOs. Also a number of new activities like internet and cybercafes have been included. For the series with 1993-94 as base, no separate estimates were prepared for the activities of cable TV operators. There are huge differences between the estimates for 1999-2000 based on the two series (Rs 4,593 crore in the presents series against Rs 1,752 crore in the series with 1993-94 as base). The workforce estimate according to EUS 1999-2000 is less than the corresponding estimates for EUS 1993-94.

Real Estate, Ownership of Dwellings, Legal and Other Business Services

In the case of real estate, the estimates of workforce and gross VAPW are based on the EUS and ES respectively. The estimates of GVA for 1999-2000 for the series with 1999-2000 as base are double the corresponding estimate for the previous series. This is because of the change in gross VAPW and the estimates of the workforce based on the EUS.

For legal services also, for the 1999-2000 series as base, the VAPW and workforce estimates are based on ES 2001-02 and EUS 1999-2000 respectively. For previous series, the estimates

Table 5: GVA from Other Services for 1999-2000 Based on 1993-94 and New Series (Rs crore)

Activity 1993-94 New Difference Series Series

Education 72589 70431 -2158 Human health and veterinary services 22303 27985 5682 Sewage and refuse disposal, sanitation activities 4374 4288 -86 Activities of membership organisations, social work 6901 10923 4022 Recreational, cultural and sporting activities 938 6422 5484 Washing and cleaning of textiles and fur products 2327 3745 1418 Hair dressing and other beauty treatment 2015 4249 2234 Custom tailoring 8638 4874 -3764 Funeral and related activities 4192 9399 5207 Private households with employed person 4070 3004 -1066 Extra-territorial organisations and bodies 3433 805 -2628 GDP total (*) 131780 146125 14345 FISIM 1949 1802 -147 GDP adjusted for FISIM (*) 129831 144323 14492

(*) Estimates are not strictly comparable due to reclassification of activities between the two series.

of workforce were based on the data from the Bar Council of India. It may be noted that the workforce estimate according to EUS 1999-2000 is almost double the workforce estimate from EUS 1993-94.

GVA from ownership of dwellings is equivalent to the gross rental of residential dwellings less the cost of repair and maintenance. Gross rental is obtained by multiplying the number of dwellings, based on the population census and inter-census growth rates of dwellings for getting the number for different years, by the gross rental per dwelling separately for rural and urban areas. There does not seem to be any problem with this methodology except that with the use of new data and a slight modification in methodology from the series with 1980-81 as base to the series with 1993-94 as base, the GVA more than doubled (from Rs 21,981 crore to Rs 44,110 crore). The methodology for the series with 1999-2000 as base is the same as in the previous series. Due to availability of new data the GVA from this sector has increased from Rs 77,564 crore to Rs 92,185 crore for the year 1999-2000. So much difference with the change in base year is however not a good sign.

For the series with 1993-94 as base, business service estimates were the aggregates of a number of components: (1) accounting, bookkeeping and auditing activities, (2) data processing, software and hardware consultancy services, (3) architectural and engineering and other technical consultancy services, and

  • (4) other business services such as advertising and press agency activities. Workforce estimates for all components were based on the EUS. GVA per worker for (1) and (3) were the same as for public administration and defence. In the case of
  • (2) GVA estimates for software activities were prepared by using data on production of software services made available by NASSCOM and GVA to output ratio estimated from the accounts of a few software companies. For other business services the GVA per worker was based on the ES and workforce on EUS 1993-94. For subsequent years the workforce was moved with the combined index of chartered accountants, architects and IIP of NIC group 35 and 36 VAPW with the CPI of AL and UNME for rural and urban areas respectively.
  • For the series with 1999-2000 as base the workforce estimates are based on EUS 1999-2000 and GVA per worker from the ES for the services sector for 2001-02. For (2) the GVA for the new series is estimated separately for the organised and unorganised components. For the organised component the methodology is the same as for the series with 1993-94 as base. For the unorganised component the EUS 1999-2000 and GVA per worker from ES 2001-02 is used. It is not clear why only software companies are considered for accounts, when the component includes, in addition, hardware, data processing, etc. Also there are some changes in the content of business services. For example, renting of machinery and equipment without operators has been included for the first time in the new series. Research and development is shifted from other services to business services [CSO 2006a].

    Financial Services

    Financial services cover banking and non-banking financial enterprises and insurance companies. Annual data regarding all the components except unorganised non-banking financial enterprises and own account moneylenders are available. For the series with 1980-81 as base year, in the absence of data available for the unorganised sector one-third of the value added of the organised non-banking financial enterprises was assumed for the unorganised component.

    There have been conceptual changes in the estimation of GVA of the banking sector. These changes are not discussed here. The only point worth mentioning here is that neither in the report for the series with 1993-94 as base nor in the report on the present series released in February 2006 was there any mention of the unorganised sector. However, in the latest release of the CSO (2006b), it is mentioned that in the new series too onethird of the value added of the organised non-banking financial enterprises is assumed for the unorganised components.

    With the passage of time, the conditions have changed and taking the same ratio may not be relevant.

    Education, Health and Other Services

    According to the series with 1993-94 as base, the economic activities covered under this sector were (1) educational services, (2) research and scientific services, (3) medical and health including veterinary services, (4) sanitary services,

    (5) religious and other community services, (6) recreation and entertainment services including TV and radio broadcasting under public and private sectors, (7) personal services (domestic, laundry, dyeing and dry-cleaning, barbers and beauty shops, tailoring, and other personal services), (8) international and other extraterritorial bodies, and (9) services not elsewhere classified (nec). Schools, hospitals, research and scientific institutions, cultural and recreational services that are operated by the government or non-profit institutions are also included. Domestic services and other personal services rendered by one household to another are also included in this sector. For the series with 1999-2000 as base, research and scientific activities have been taken along with business services. Dry-cleaning,

    Table 6: Estimates of Employment from Various Surveys for Other Services (in numbers)

    CSO EUS (1993-94) EUS (1999-2000) Informal NAE (1999-2000) Unorg Service (2001-02)
    1 Sewage and refuse disposal, sanitation activities 2 Community services 3 Recreational and cultural services 4 Washing and cleaning of textile, fur related products 5 Hair dressing and other beauty treatments 6 Private households with employed persons 7 Extraterritorial organisations and bodies 8 Funeral and related activities 495452 1289602 981534 2480359 1916130 1864941 18114 3909391 383998 1599275 639760 1285660 1030989 1533243 62283 3187699 441930 1154877 864600 1579762 15338 7558406* 106422 353937 593731 1902103 1604495 462774 57606 169555 1073537 1817919 1982580 347413
    Note: * The figure for EUS (1999-2000) is the total of 4, 5 and 8.
    Economic and Political Weekly September 15, 2007 3737

    tailoring, hair dressing, funeral and related activities, and private households with employed people have been taken separately.

    For the public sector the annual estimates of GVA are based on the annual reports of various enterprises, while for the private sector the base year estimates are based on the ESs for getting GVA per worker and on EUSs for estimation of the workforce. The estimates of the workforce for other years are obtained by making use of growth rates in workforce between the two EUSs or in some cases ESs are used.

    For education services, the GVA has been estimated separately for public and private recognised institutions and unrecognised institutions.1 For public institutions the annual GVA is based on budget documents. For all recognised institutions the data of net value added (NVA) are available for education in India for 1986-87. GVA of private recognised institutions is obtained by subtracting the NVA for the public sector from the GVA of the total recognised institutions for 1986-87. NVA of private sector institutions is brought forward by a specially constructed index of workforce and CPI for industrial workers to get the estimates at current prices. The workforce of private recognised institutions is obtained by subtracting the workforce of public recognised institutions and unrecognised institutions from the total workforce of education services. GVA estimates of un recognised institutions have been obtained as a product of GVA per worker from ES 1990-91 and the workforce estimates from the same survey moved to 1993-94 using the growth observed between the ES 1983-84 and 1991-92. For subsequent years, the workforce estimates have been moved using the annual compound growth rate observed between EUS 1987-88 and 1993-94. Estimates of GVA per worker have been projected to other years by making use of CPI (AL) and CPI (UNME) for rural and urban areas respectively.

    For the series with 1999-2000 as base the GVA per worker in the private sector is based on the ES 2001-2002 and workforce estimates on the EUS 1999-2000. Also, for this series estimates of coaching and tuition activities are prepared separately. It is not clear why the annual estimates of value added of private recognised institutions are not available. For unrecognised insti tutions also the GVA per worker is based on ES 2001 and the workforce is obtained as residual. There is, however, a problem in the estimates of workforce. The estimates according to EUS 1999-2000 are 14 per cent less than the estimates for EUS 1993-94 (76,87,423 against 87,67,965). The estimate used by the CSO for 1999-2000 in the new series is 8,586,361. According to other surveys, i e, ES 1991-92 and SES 1998-99, also, the workforce is underestimated.

    For the series with 1993-94 as base the estimates for health services were prepared separately for the public sector, private organised and private unorganised sector. For the public sector the annual estimates were directly available from the budget documents, while for the private organised sector the workforce estimates taken from the DGE&T and GVA per worker of the public sector were used. For the unorganised sector the workforce estimates were multiplied with the GVA per worker obtained from the ES. For subsequent years the workforce estimates were moved by using the compound growth rates observed between two EUSs. For current price estimates the CPI for AL and UNME were used for rural and urban areas respectively.

    Appendix: Sector-wise Estimates of Workforce and Number of Enterprises of Services from Various Sources (in numbers)

    Sector No Employed No of Enterprises
    Wholesale and retail trade
    ES (90-91) 23340471 14085462
    EUS (93-94) 27124861
    ES (96-97) 23341747 14647545
    SES (98-99) 23488481 14072202
    EUS (99-00) 32882421
    Informal NAE (99-00) 28779983 16847683
    Hotels and restaurants
    ES (88-89) 3572000 1216000
    ES (93-94) 4143000 1492000
    EUS (93-94) 3337271
    SES (98-99) 4751542 2082087
    EUS (99-00) 4267755
    Informal NAE (99-00) 4188033 1776508
    Unorg-service (01-02) 5089132 2156574
    Railway transport
    EUS (93-94) 1879057
    EUS (99-00) 964181
    Transport other than railways
    EUS (93-94) 8249369
    EUS (99-00) 11420018
    Informal NAE (99-00) 4933940 3609932
    Unorg-service (01-02) 6190105 4731287
    Real estate activities
    EUS (93-94) 120069
    EUS (99-00) 166524
    Informal NAE (99-00) 116612 55768
    Unorg-service (01-02) 171992 96511
    Legal services
    ES (83-84) 34269
    ES (91-92) 166491
    EUS (93-94) 388957
    EUS (99-00) 751409
    Informal NAE (99-00) 263341 154079
    Unorg-service (01-02) 335317 251271
    Communication services
    ES (91-92) 58598
    EUS (93-94) 1235216
    SES (98-99) 695862
    EUS (99-00) 1178606
    Informal NAE (99-00) 632504 324237
    Unorg-service (01-02) 1084876 621470
    Other business services
    EUS (93-94) 782545 0
    EUS (99-00) 1088289 0
    Informal NAE (99-00) 792608 315824
    Unorg-service (01-02) 971305 378068
    Education, scientific and research services
    EUS (93-94) 8767965
    EUS (99-00) 7687423
    Informal NAE (99-00) 1521184 580237
    Unorg-service (01-02) 4204225 1266805
    Health and medical services
    ES (83-84) 701275 329494
    ES (91-92) 821000 496500
    EUS (93-94) 2752758
    SES (98-99) 2064166 994047
    EUS (99-00) 2644850
    Informal NAE (99-00) 1283579 780436
    Unorg-service (01-02) 2074950 1331492
    Other services
    EUS (93-94) 9722907
    EUS (99-00) 11614913
    Informal NAE (99-00) 5023463 2911093
    Unorg-service (01-02) 5448610 3078454

    Note: A unified survey called special enterprise survey (SES in the above table) was carried out for 1998-99 by the CSO covering all the non-agricultural activities in the unorganised sector.

    There is no change in the methodology for the series with 1999-2000 as base. For health services also the workforce estimates from EUS 1999-2000 were less than those of EUS 1993-94. Also, the estimates were much on the low side according to SES 1998-99. For the 1999-2000 series the estimate of workforce used is 27,38,635, which is slightly less than the estimate given by EUS 1993-94. It is, however, more than the estimate given for the informal sector for 1999-2000.

    There has been a change in the content of some of the compo nents under other services. For example, custom tailoring is separately taken in the series with 1999-2000 as base. In some activities the coverage has been broadened [CSO 2006a]. There has been substantial difference in the estimates of GVA for 1999-2000 for the series with 1993-94 as base and the revised series. This can be noticed from Table 5.

    According to the CSO the differences in GVA are due to change in coverage and/or in the workforce and GVA per worker. We have not analysed the differences in GVA per worker. The workforce estimates for different services based on different sources are given in Table 6.

    For sanitary services, the estimates of workforce based on EUS 1993-94 and EUS 1999-2000 seem to be in the right direction. The estimate used by the CSO, however, is 12 per cent more than the estimate given by EUS 1999-2000.

    For sanitary services the estimates based on ES 2001-02 are much less than those based on ES 1999-2000. Similar is the situation with community, washing, and funeral and related services. Estimates used by the CSO for all the categories are more than the estimates given by the EUS 1999-2000. The problem is severe in the case of funeral and related activities where the workforce according to ES 2001-02 is less than 10 per cent of the estimate used by the CSO. For community services the estimates given by various sources differ widely. The EUS 1999-2000 estimate is less than the EUS 1993-94 estimate. The estimate used by CSO is also less than that of EUS 1993-94. The variation in workforce estimates from various surveys in all these service activities is large and the estimates based on these surveys have to be taken with care.

    Concluding Remarks

    As far as national accounts are concerned, the only sources of information relating to the unorganised segment of the service sector, and in fact the unregistered manufacturing sector also, are the enterprise surveys. However, much of the information obtained from the surveys still needs improvement. In the trade sector, it is for the first time, with 1999-2000 as base, that the results of the survey covering the entire informal sector have been considered for estimating GVA per worker. In the previous surveys the GVA per worker of OAEs was much less than that from NDTEs, e g, for the 1996-97 survey the GVA per worker from OAEs was about 40 per cent of the corresponding estimate from NDTEs. The estimates of GVA for the trade sector based on the workforce from EUS 1999-2000 and GVA per worker from ES 1999-2000 for moving the GVA to other years are not satisfactory. Also, the details of the index of trading activity in the series with 1993-94 and 1999-2000 are not available in the write-ups for these two series. However, this index used for the 1980-81 series does not seem satisfactory. Some thought has to be given to searching for new indices for this purpose.

    The results of the different enterprise surveys conducted by the NSSO and CSO vary widely in many cases. There may thus be errors in the workforce estimates prepared for the year 1999-2000 based on the employment and unemployment survey for 1999-2000 and the population census 2001. In fact the estimates used by the CSO for estimating GVA from various sectors are different from those from the abovementioned source. There are problems in the estimates of GVA per worker, as the results vary over different surveys. In this paper, however, we have not analysed the details of GVA per worker. In this respect it can only be said that moving the GVA per worker to other years by making use of consumer price index numbers may not be satisfactory. Actually in some services change in value addition may exist in real terms also. In fact the change in productivity is not being taken into account. Even when there is no change in productivity, using the consumer price index is not satisfactory, as it covers only a part of the value added.

    There are problems with the use of physical indicators for estimation of workforce for future years. For some services the growth rates of employment between EUS 93-94 and EUS 1999-2000 are used to get the workforce estimates for different years. If the estimates are not reliable, the growth rates also cannot be reliable. Also, in expanding services the past growth in workforce may not be a reliable indicator. For the series with 1993-94 as base, in the case of unrecognised institutions, the workforce estimates are also based on the enterprise surveys and are carried forward to 1993-94 by making use of the growth rate between ES 1983-84 and 1991-92. Fortunately for the new series, the base year and the year of the EUS are same. In the document released by the CSO in March 2006, the physical indicators for moving the GDP estimates to subsequent years have been mentioned. In addition to the growth between two EUSs, in a number of cases like research and development the indicator is growth in population, which is not appropriate. The indicators show no effect of the increased efforts towards reducing unemployment.

    There is no alternative to the enterprise surveys and employment unemployment surveys; their periodicity can be reduced. In fact we are already having thin annual employmentun employment surveys. We can conduct them in such a way that they can be helpful in getting more reliable workforce estimates.

    EPW

    Email: msaluja@idfresearch.org

    Note

    1 For the series with 1980-81 as base, the estimates were prepared separately for recognised and unrecognised institutions. Based on the ES 1983-84 it was assumed that GVA from unrecognised institutions formed 4.5 per cent of the GVA of the recognised institutions.

    References

    Kulshreshtha, A C, Alok Kar and Gulab Singh (2002): ‘Enterprise Surveys

    in the Improvement of Indian National Accounts Statistics’, Journal of

    Income and Wealth, Vol 24, Nos 1 and 2, January-December. CSO (2006a): New Series of National Accounts Statistics, Base Year

    1999-2000, Central Statistical Organisation, Ministry of Statistics and

    Programme Implementation, Government of India, February.

    – (2006b): Central Statistical Organisation, Ministry of Statistics and Programme Implementation, Government of India, March.

    Economic and Political Weekly September 15, 2007

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