Private non financial corporate sector of the Indian economy in the frameworkof system of national accounts

Abstract

Liberalisation measures have far-reaching implications for the growth and behaviour of private corporate sector. Although there are several studies on performance of certain specific industries or certain groups of industries, studies on various aspects of the corporate sector as a whole are limited. Studies on the private corporate sector in the framework of System of National Accounts (SNA) have been rather rare. Questions on the overall size of the corporate sector in terms of output or value added and questions on low rates of savings and borrowings have not been satisfactorily answered, which are essential in shaping the government fiscal and economic policies. The current study of the private non-financial corporate sector (PNFCS) for the years 2000-01, 2001-02 and2002-03 presents a broad picture of the PNFCS in this perspective. The PNFCS have been studied through a sample of more than 4500 companies, with respect to the national accounting aggregates viz., value added, savings and fixed capital formation. Sequence of accounts presented in the framework of 1993 SNA help to study the flow of different activities of production, generation, distribution and redistribution of incomes generated. The study reveals that the share of private non-financial corporate sector in the gross domestic product at current prices has gone up from 15.7 percent in 2000-01 to nearly20.0 percent in 2002-03. The gross value added at current prices grew at an impressive19.0 percent in 2001-02 and 24.6 percent in 2002-03, which is much higher than the All India growth rate of 9.9 and 7.6 percent during the same period. The manufacturing sector contributes to nearly 65 percent and services 26 percent of the total GV A of this sector. The study also reveals that the rates of savings of the sector have been low at around 23 and are not enough even to finance the gross fixed capital formation. The study suffers from certain limitations of assumptions and data constraints. Inspite of these limitations the current study gives an economically meaningful picture of the nonfinancial private corporate sector of the Indian economy in the national accounts perspective for the years covered in the study.