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Indian economy: Change in base year pushes FY14 GDP growth to 6.9 per cent

Commenting on the data, former finance minister P Chidambaram defended the previous government.

By: ENS Economic Bureau | New Delhi |
Updated: January 31, 2015 1:48:40 pm

With an updated base year as well as a revised methodology for measuring economic growth, the Indian economy is estimated to have grown at a much faster 6.6 per cent in 2013-14 as against the earlier estimate of 4.7 per cent (old series) growth in gross domestic product at market prices.

The growth is even sharper at 6.9 per cent in 2013-14, according to the new concept of gross value added at basic prices that was introduced by the Central Statistics Office on Friday.

“Real GDP or GDP at constant (2011-12) prices stands at Rs 92.8 lakh crore and Rs 99.2 lakh crore, respectively, for the years 2012-13 and 2013-14, showing growth of 5.1 per cent during 2012-13, and 6.9 per cent during 2013-14,” said an official release.

The revised series is also expected to boost India’s growth prospects for 2014-15 where the Reserve Bank of India has projected a 5.5 per cent growth rate based on factor cost. India’s per capita income has also seen a sharp rise at Rs 80,388 in 2013-14 from Rs 71,593 in 2012-13 under the new series.

Commenting on the data, former finance minister P Chidambaram defended the previous government. “It should put an end, once and for all time, to the misconceived charge that the UPA government had mismanaged the economy,” he said in a statement.

National Statistical Commission chairman Pronab Sen said the revised methodology is based on international standards and indicates that growth was not as dismal as was earlier projected to be.

However, Sen and the country’s chief statistician TCA Anant cautioned against comparison with the Chinese growth rate base don the new series. Its impact on the common man would be marginal.

In absolute terms, the size of the economy declined in 2013-14 in the new series to Rs 113.5 lakh crore compared to Rs 113.6 lakh crore in the old series that was attributed to a correction through a fresh survey on unorganised trade enterprises. The concept of GVA is considered to be a better indicator to measure economic activities as it includes not only the cost of production but also product subsidies and taxes.

The CSO has also revised the base year for calculation of national accounts to 2011-12 from 2004-05 and has included more datasets including the database of the MCA 21 for computing private corporate sector data and statistics on financial corporations, pension funds and stock brokers.

“It is one of the largest exercises of base year revision for GDP ever undertaken. It is a structural break from the previous series,” said Anant.

Announcing that GDP at factor cost will no longer be discussed, an official statement said, “It will improve ease of understanding (data) for analysis and facilitate international compatibility.”

Fiscal deficit overshoots FY15 BE

India’s fiscal deficit overshot the Budget Estimate of Rs 5.31 lakh crore by December-end and may prompt the Centre to take tough steps in the remaining part of FY15 to restrict it to 4.1 per cent of GDP. As per the data released on Friday, fiscal deficit during April-December period was Rs 5.32 lakh crore or 100.2 per cent of the FY15 estimate, mainly because of subdued revenue realisation. PTI

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