2015 India GDP rebasing

Last updated

In 2015, the Central Statistics Office (an office under the Ministry of Statistics and Programme Implementation) of the Government of India made a number of changes to the way it calculated the gross domestic product of India, including a change in the base year relative to which calculations are done. This change was known as the 2015 India GDP rebasing or just the rebasing. [1] [2] [3] [4] [5] [6] [7] [8] [9]

Contents

Timeline

The new method was used to release updated numbers for Fiscal Year 2013 (April 2013 to March 2014) and 2014 (April 2014 to March 2015). Initial announcements about the change were made in February 2015, and additional series were released in 2015; much of the commentary on the changes happened in April 2015. [2] [4] [9]

Changes made

There were two main changes made to bring Indian GDP calculations more in line with international standards as enshrined in the System of National Accounts: change of the base year to 2011/12, and switch to market prices. A number of other minor changes were made, such as better data sources, and new classification and calculation methods.

Change of base year

Since January 2010, the base year used by statisticians in India's Central Statistics Office was the months endinyear for calculations to the year ending March 2012 (i.e., the 2011/12 year). [1] [2] [4] [10] According to the Frontier Strategy Group, India changes the base year for its GDP calculation about once every five years, so this change was in keeping with past changes. [5]

Change to using market prices

The change also switched GDP calculation to using market prices rather than factor costs. to take into account gross value addition in goods and services as well as indirect taxes and subsidies (adding taxes and reducing subsidies). [8] [10] The change was claimed by the government to be more in line with global practices, and specifically in line with the recommendations of the System of National Accounts (SNA) 2008. [2] [5] [7] Commentators generally agreed; Tim Worstall of Forbes called the previous system of factor costs a relic of the state-driven, manufacturing-focused approach to the economy of the Nehruvian Fabian socialist era. [2]

Incorporation of more and better survey data

The government of India identified three new categories of data sources that were now being used in GDP calculation to make it more reliable: [4]

Other changes

Effect on data series and reception of the change

Composition of GDP

Under NAS 2011-2012, the services sector constitutes a smaller proportion of overall GDP at 50.91% as of the fiscal year that ended March 2014 compared to 57.03% under the previous system. [7] Under the new calculation method, industry became 31% compared to the old 25%, whereas services became 51% compared to the old 57%. Within industry, all three components, mining, manufacturing, and construction, were raised. [8] This contrasted significantly with the results of past GDP rebasings, such as the 2010 Ghana GDP rebasing, [11] [12] [13] and the 2014 Nigeria GDP rebasing and similar rebasings in Kenya, Uganda, Tanzania, and Zambia. [14] [15] [16] FY14 growth rate was revised upward significantly, from 5% to 6.9% and the FY13 growth rate from 4.7% to 5.1%. [4]

Some critics of the new method also noted that the downward revision of nominal GDP adversely affected various economic risk ratios. [7]

The growth rate of GDP

GDP growth rates under the new series appeared to be higher than they had been under the old series; however, per the preceding section, this increase was achieved because the estimate of GDP level for previous years was lower in the new series than the old. The GDP being low with old method is just representation of how it was . The new method is better and is of international standards. [8]

Initially, there was a lack of data points released with both the old and new methods for a meaningful comparison (specifically, the new series was not extended back in time so that its differences with the old series could be better understood). [7] A number of people were critical of CSO for not providing this data. [2] [5] [9]

The increase was considered suspicious by commentators who noted that other indicators (such as tax revenues) seemed to show a slowdown in economic growth, suggesting that either the role of the informal, untaxed sector was increasing fast, or some of the data was wrong. [10]

See also

Related Research Articles

The economy of Ghana has a diverse and rich resource base, including the manufacturing and exportation of digital technology goods, automotive and ship construction and exportation, and the exportation of diverse and rich resources such as hydrocarbons and industrial minerals.

<span class="mw-page-title-main">Gross domestic product</span> Market value of goods and services produced within a country

Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced in a specific time period by a country or countries. GDP is more often used by the government of a single country to measure its economic health. Due to its complex and subjective nature, this measure is often revised before being considered a reliable indicator.

<span class="mw-page-title-main">Economy of Nepal</span>

The economy of Nepal is developing category and largely dependent on agriculture and remittances. Until the mid-20th century Nepal was an isolated pre-industrial society, which entered the modern era in 1951 without schools, hospitals, roads, telecommunications, electric power, industry, or civil service. The country has, however, made progress toward sustainable economic growth since the 1950s. The country was opened to economic liberalization, leading to economic growth and improvement in living standards when compared to the past. The biggest challenges faced by the country in achieving higher economic development are the frequent changes in political leadership, as well as corruption.

<span class="mw-page-title-main">Economy of Nigeria</span>

The economy of Nigeria is a middle-income, mixed economy and emerging market with expanding manufacturing, financial, service, communications, technology, and entertainment sectors. It is ranked as the 39th-largest economy in the world in terms of nominal GDP, the second largest in Africa and the 27th-largest in terms of purchasing power parity.

<span class="mw-page-title-main">Economy of Tanzania</span>

The economy of Tanzania is a lower-middle income economy that is overwhelmingly dependent on agriculture. Tanzania's economy has been transitioning from a planned economy to a market economy since 1985. Although total GDP has increased since these reforms began, GDP per capita dropped sharply at first, and only exceeded the pre-transition figure in around 2007.

<span class="mw-page-title-main">Economy of Australia</span>

Australia is a highly developed country with a mixed economy. As of 2023, Australia was the 14th-largest national economy by nominal GDP, the 19th-largest by PPP-adjusted GDP, and was the 21st-largest goods exporter and 24th-largest goods importer. Australia took the record for the longest run of uninterrupted GDP growth in the developed world with the March 2017 financial quarter. It was the 103rd quarter and the 26th year since the country had a technical recession. As of June 2021, the country's GDP was estimated at $1.98 trillion.

Productivity is the efficiency of production of goods or services expressed by some measure. Measurements of productivity are often expressed as a ratio of an aggregate output to a single input or an aggregate input used in a production process, i.e. output per unit of input, typically over a specific period of time. The most common example is the (aggregate) labour productivity measure, one example of which is GDP per worker. There are many different definitions of productivity and the choice among them depends on the purpose of the productivity measurement and data availability. The key source of difference between various productivity measures is also usually related to how the outputs and the inputs are aggregated to obtain such a ratio-type measure of productivity.

<span class="mw-page-title-main">Economy of India</span>

The economy of India has transitioned from a mixed planned economy to a mixed middle-income developing social market economy with notable public sector in strategic sectors. It is the world's fifth-largest economy by nominal GDP and the third-largest by purchasing power parity (PPP); on a per capita income basis, India ranked 139th by GDP (nominal) and 127th by GDP (PPP). From independence in 1947 until 1991, successive governments followed Soviet model and promoted protectionist economic policies, with extensive Sovietization, state intervention, demand-side economics, natural resources, bureaucrat driven enterprises and economic regulation. This is characterised as dirigism, in the form of the Licence Raj. The end of the Cold War and an acute balance of payments crisis in 1991 led to the adoption of a broad economic liberalisation in India and indicative planning. Since the start of the 21st century, annual average GDP growth has been 6% to 7%. The economy of the Indian subcontinent was the largest in the world for most of recorded history up until the onset of colonialism in early 19th century.

<span class="mw-page-title-main">Agriculture in Nigeria</span> Overview of agriculture in Nigeria

Agriculture is a sector of the Nigerian economy, accounting for up to 35% of total employment in 2020. According to the FAO, agriculture remains the foundation of the Nigerian economy, providing livelihoods for most Nigerians and generating millions of jobs. Along with crude oil, Nigeria relies on the agricultural products it exports to generate most of its national revenue. The agricultural sector in Nigeria comprises four sub-sectors: crop production, livestock, forestry, and fishing.

The economic development in India followed socialist-inspired politicians for most of its independent history, including state-ownership of many sectors; India's per capita income increased at only around 1% annualised rate in the three decades after its independence. Since the mid-1980s, India has slowly opened up its markets through economic liberalisation. After more fundamental reforms since 1991 and their renewal in the 2000s, India has progressed towards a free market economy. The Indian economy is still performing well, with foreign investment and looser regulations driving significant growth in the country.

<span class="mw-page-title-main">Economy of the Republic of Ireland</span>

The economy of the Republic of Ireland is a highly developed knowledge economy, focused on services in high-tech, life sciences, financial services and agribusiness, including agrifood. Ireland is an open economy, and ranks first for high-value foreign direct investment (FDI) flows. In the global GDP per capita tables, Ireland ranks 2nd of 192 in the IMF table and 4th of 187 in the World Bank ranking.

<span class="mw-page-title-main">Economy of Ivory Coast</span>

The economy of Ivory Coast is stable and currently growing, in the aftermath of political instability in recent decades. The Ivory Coast's economy is largely market-based and depends heavily on the agricultural sector. Almost 70% of the Ivorian people are engaged in some form of agricultural activity. GDP per capitaArchived 4 May 2012 at the Wayback Machine grew 82% in the 1960s, reaching a peak growth of 360% in the 1970s, but this proved unsustainable and it shrank by 28% in the 1980s and a further 22% in the 1990s. This decline, coupled with high population growth, resulted in a steady fall in living standards. The Gross national product per capita, now rising again, was about US$727 in 1996. It was substantially higher two decades before.

<span class="mw-page-title-main">Historical GDP of China</span> Overview of economic growth and decline in the East Asian country

This article includes a list of China's historical gross domestic product (GDP) values, the market value of all final goods and services produced by a nation in a given year. The GDP dollar estimates presented here are either calculated at market or government official exchange rates (nominal), or derived from purchasing power parity (PPP) calculations. This article also includes historical GDP growth.

<span class="mw-page-title-main">Urbanization in India</span> Overview of urbanization in India

Urbanization in India began to accelerate after independence, due to the country's adoption of a mixed economy, which gave rise to the development of the private sector. The population residing in urban areas in India, according to the 1901 census, was 11.4%, increasing to 28.53% by the 2001 census, and is now currently 34% in 2017 according to the World Bank. According to a survey by the United Nations, in 2030 40.76% of country's population is expected to reside in urban areas. As per the World Bank, India, along with China, Indonesia, Nigeria, and the United States, will lead the world's urban population surge by 2050.

Statistics on unemployment in India had traditionally been collected, compiled and disseminated once every ten years by the Ministry of Labour and Employment (MLE), primarily from sample studies conducted by the National Sample Survey Office. Other than these 5-year sample studies, India has – except since 2017 – never routinely collected monthly, quarterly or yearly nationwide employment and unemployment statistics. In 2016, the Centre for Monitoring Indian Economy, a non-governmental entity based in Mumbai, started sampling and publishing monthly unemployment in India statistics.

The Maddison Project, also known as the Maddison Historical Statistics Project, is a project to collate historical economic statistics, such as GDP, GDP per capita, and labor productivity.

In November 2010, the government of Ghana made a number of changes to the way it calculated GDP, resulting in a 60% upward change in its estimate. The change led to discussion of the accuracy of GDP estimates, particularly in the context of Africa. It was also the first of many rebasings undertaken by African economies, most of which led to significant upward revisions in their estimates of GDP.

In April 2014, the National Bureau of Statistics, Nigeria, under the government of Nigeria, announced changes to the way it calculated GDP, changing the calculation to more accurately reflect current prices and market structure, thus giving more weight to Nollywood and mobile phone services that had grown a lot recently. As a result, Nigeria's estimate of its GDP increased by 89%, moving it from Africa's second biggest economy to the biggest economy. These changes were known as the 2014 Nigeria GDP rebasing or simply the rebasing.

<span class="mw-page-title-main">Economic history of Ghana</span>


Economic history of Ghana details the economic situation of Ghana since pre-colonial times to date.

References

  1. 1 2 Zhong, Raymond; Kala, Anant Vijay (January 30, 2015). "India Changes GDP Calculation Method. Statistics Ministry Changing Base Year for Benchmark, Switches to Market-Price Calculation". Wall Street Journal. Retrieved October 15, 2017.
  2. 1 2 3 4 5 6 7 Worstall, Tim (April 18, 2015). "India's Change In GDP Calculation Method Seems Highly Sensible". Forbes. Retrieved October 15, 2017.
  3. ↑ "The New Contagious Crisis called GDP Revision!". May 14, 2015. Retrieved October 16, 2017.
  4. 1 2 3 4 5 "Re-Basing Ups India's GDP Growth Rate In 2013-14 From 5% To 6.9%". Seeking Alpha. February 2, 2015. Retrieved November 17, 2017.
  5. 1 2 3 4 5 6 7 8 Pratima Singh (October 12, 2015). "India's new GDP series and why it matters". Emerging Markets Insights. Retrieved October 21, 2017.
  6. ↑ Kenneth Rapoza. "What's Behind India's Magical GDP Numbers?". Forbes. Archived from the original on 2017-10-21. Retrieved October 21, 2017.
  7. 1 2 3 4 5 6 "An Early Evaluation of India's GDP Rebasing". CEICdata. February 17, 2015. Retrieved October 21, 2017.
  8. 1 2 3 4 David Keohane (February 3, 2015). "India: GDP growth rate up, confidence in statistics down?". Financial Times . Retrieved October 21, 2017.
  9. 1 2 3 Singh, Rajesh Kumar (April 17, 2015). "Statisticians face queries on GDP calculation". Business Today. Retrieved November 18, 2017.
  10. 1 2 3 Singh, Rajesh Kumar; Kumar, Manoj (February 9, 2015). "Methodology change sees Indian economy grow faster than China's". Reuters . Retrieved November 15, 2017.
  11. ↑ Plumer, Brad (November 24, 2012). "Think U.S. GDP numbers are unreliable? Check out Ghana". Washington Post. Retrieved October 16, 2017.
  12. ↑ Jerven, Morten; Duncan, Magnus Ebo (August 1, 2012). "Revising GDP estimates in Sub-Saharan Africa: Lessons from Ghana" (PDF). The African Statistical Journal. 15. Retrieved October 16, 2017.
  13. ↑ Jerven, Morten (November 20, 2012). "Lies, damn lies and GDP. Or, how Ghana went from being one of the poorest countries in the world one day to an aspiring middle-income one the next" . Retrieved October 16, 2017.
  14. ↑ Blas, Javier; Wallis, William (April 7, 2014). "Nigeria almost doubles GDP in recalculation". Financial Times. Retrieved October 17, 2017.
  15. ↑ "Step change. Revised figures show that Nigeria is Africa's largest economy". The Economist. April 12, 2014. Retrieved October 17, 2017.
  16. ↑ Sy, Amadou (March 3, 2015). "Are African countries rebasing GDP in 2014 finding evidence of structural transformation?". Brookings Institution. Retrieved October 17, 2017.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.