The India’s economy grew at a faster 6.9% in 2013-14 than 4.7% calculated earlier according to a new series of gross domestic product (GDP) data announced on Friday, broadening the coverage to computed income across segments across farm, corporate and unorganised sectors.
The new series with a base year of 2011-12 uses a “gross value added” (GVA) formula to calculate GDP—the broadest measure of the total value of goods and services produced in the country—incorporates granular information even from the level of the small firms as well output and spending on items such as smart phones and LED televisions.
GVA, which measures the difference in value between the final good and the cost of ingredients used in its production, widens the scope of capturing more economic activity than the earlier “factor cost” approach—a sum of the total cost of all factors used to produce a good or service, net of taxes and subsidies.
According to the latest method India’s GDP at current market prices (2013-14) is valued at Rs 113.5 lakh crore compared to Rs 104.77 lakh crore in the old data series—valuing Asia’s third largest economy by more than Rs 8 lakh crore than estimated earlier.
Likewise, the annual average income of an Indian (per capita) now stands at Rs 80,338 compared to the earlier estimates of Rs 74,380.
A change in base year for computing national accounts pushed up the “real” or inflation-adjusted economic growth rate for 2013-14 to 6.9%, while earlier estimate on the basis of old series was 4.7%.
Similarly, the economic growth rate for 2012-13 has been revised upwards to 5.1%, compared with 4.5 % estimated earlier.
The base year of the national accounts is changed periodically to factor in structural changes in the economy and present a more realistic picture of macroeconomic aggregates.
The new series, which has been in the works for a couple of years, will include data on unorganised manufacturing and services and income from public private partnership (PPP) projects among others.
The data for corporate is now collated from the corporate affairs ministry’s MCA21 records, a comprehensive compendium that allows collecting micro information even from the level of the small firms.
In the earlier series such data was taken primarily from the Reserve Bank of India’s (RBI’s) study on company and finances.
Apart from the above, the new series will incorporate results of recent national sample surveys such as those on enterprises, unemployment, debt and investment, situation assessment of farmers and survey of land livestock holdings.
India is set to become the world’s fastest growing major economy by 2016 ahead of populous neighbour China that is battling an industrial deceleration, the International Monetary Fund (IMF) has said in its recent latest forecast.
India is expected to grow at 6.3% this year and 6.5% in 2016 by when it is likely to cross China's projected growth rate, the IMF said in the latest update of its World Economic Outlook.
Latest data showed that China posted growth of 7.4% last year -slowest in 24 years. The Chinese economy, however, will continue to be big in size as its gross domestic product (GDP) reached $10.4 trillion this year, more than five times India’s nearly $2 trillion GDP.
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