GDP measurement: Challenges in manufacturing and agriculture sector

Abstract

CSO came up with a new National Accounts Statistics Series in January 2015, with the base year as 2011-12 as opposed to the earlier 2004-05. This coincided with the 68th round of NSS Survey on Employment and Unemployment. Usually, base year revisions are characterized with marginal changes in the absolute size and growth rate of GDP. However, the new series revision by CSO led to significant departures from the earlier series in that the economy’s growth rate in 2013-14 as per the old series was – 4.8% while it jumped to 6.2% in the new series. As per the CSO, the motivation behind incorporating the changes were three-fold – 1) revision of base year 2) bringing methodology in line with the international standards of System of National Accounts (SNA) 3) comprehensive review of the existing database and approach utilized in calculation of macroeconomic aggregates. [1] In this current work, we review the changes in the measurement of GDP with specific focus around single vs double deflation methodology and ascertain how these changes impact the growth and output figures.