Flip Session 1

GDP estimation: Why the estimates differ between the 2004-05 base and the 2011-12
base

Some main points:

1. GDP base revision happened in 2015: Base changed from 2004-05 to 2011-12
2. The move increased the growth rates suddenly
3. Earlier revisions have changed the level of GDP but such sharp changes in growth
rates have not been witnessed earlier
4. In 2012-13 and 2013-14, the GDP at market prices under old series grows at 4.7% and
5% respectively. Under new series for same period, growth rate is 5.1% and 6.9 %
respectively. (Looks like the UPA was quite good, after all!)
5. India seen to be growing at 7.6% in 2015-16 as per new estimates as compared to
6.9% as per earlier estimates
6. Main change: Weve moved from GDP at factor cost to GDP at market prices
7. Main issue is GDP from manufacturing
8. Earlier, factories output was considered; now there is a shift to enterprises: These
may not be core manufacturing concerns
9. RBI used IIP, ASI as well as a sample of private sector companies to understand the
manufacturing GVA.
10. Now they are using MCA-21, in which there are 5,20,000 companies.
11. First, many of these could be mere shells; they may not be into production at all.
12. The blow up factor is controversial. CSO claims that they have internal access to
live companies i.e. companies which file their annual returns at least once in the
past 3 years. As per this number, the GVA is blown up. The problem is that there is
no transparency to this system at all.
13. Some economists have hence claimed that India now has a set of dubious GDP
numbers like China.
14. IIP numbers do not synch well with the GVA numbers.
15. In the same period when GDP shows tremendous increase, IIP shows very mild
increment.

References:

16. http://www.livemint.com/Politics/jKTdOc5DMlJs7QuaoZdLtN/The-truth-behind-
Indias-new-GDP-numbers.html

17. https://ajayshahblog.blogspot.in/2016/09/the-great-indian-gdp-measurement.html

18. http://www.cprindia.org/sites/default/files/policy-
briefs/New%20GDP%20Series_May%202015.pdf

19. http://www.ncaer.org/events/ipf-2016/Session-II-B-N-Goldar-Comments.pdf