ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Private Corporate Sector Overestimated?

Seeds of Doubt on New GDP Numbers

The estimates of the private corporate sector in 2012-13, using a new data set, seem to account for a substantial part of the upward revision of the economic aggregates in the new series of National Accounts Statistics. This brief note poses a few questions about their veracity.

The revised series of the National Accounts Statistics (NAS) with 2011–12 as the base year (new series, hereafter), replacing the earlier series with the base year 2004–05, has attracted widespread criticism. For instance, the growth rate of the gross domestic product (GDP) for 2013–14 according to the new series was 6.6%, compared to 4.7% in the earlier series. The new and higher figure seems quite at odds with other economic indicators such as the growth in bank credit, the Index of Industrial Production and corporate performance. Many policymakers seem uneasy with the new series and have expressed a desire to continue using the older series for now.

The Central Statistics Office (CSO) says that the higher estimates of gross value added (GVA), savings and gross fixed capital formation (investment for short) in 2013–14 are on account of the use of an improved database (known as MCA-21) for the private corporate sector, in place of the Reserve Bank of India’s (RBI) thin sample of large firms with a high paid-up capital. To quote:

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