Zee Media Bureau
A new series of national accounts with 2011-12 as base year for computing economic growth rate has been released Friday, which may provide some cushion to government struggling to meet fiscal deficit target.
The GDP data based on the new series has been be released today for three consecutive years from 2011-12. At present, the GDP is computed on 2004-05 base year.
Real GDP or GDP at constant (2011-12) prices stood at Rs.92.8 lakh crore and Rs.99.2 lakh crore, respectively for the years 2012-13 and 2013-14, showing growth of 5.1 percent during 2012-13, and 6.9 percent during 2013-14.
The National Statistical Commission has suggested that the base year for computing national account should be revised every five years.
With the revision of base year, the size of economy is expected to bigger which in turn would help the government in keeping the fiscal deficit, computed as a proportion of the Gross Domestic Product (GDP), lower.
The base year for computing national accounts is revised by the Statistics Ministry periodically to present a more realistic picture of the economy.
The government is committed to restricting the fiscal deficit at 4.1 percent of the GDP during the current fiscal, the lowest level in seven years, and has taken several steps towards it.
The government had put in place a fiscal consolidation roadmap as per which the fiscal deficit has to be brought down to 3 percent of the GDP by 2016-17.
To reduce the fiscal deficit to seven-year low, it has announced a slew of austerity measures aimed at cutting non-plan spending by 10 percent.
As per the data released by Controller General of Accounts on December 31, India's fiscal deficit during the April-November period was 98.9 percent of the 2014-15 estimate, primarily on account of subdued revenue realisation.
Fiscal deficit - the gap between government expenditure and revenue - during the same period last year was 93.9 per cent of that year's target.
The base year of the national accounts is changed periodically to take into account the structural changes which take place in the economy and to depict a true picture of the economy through macro aggregates.
The first official estimates of national income were prepared by the Central Statistical Organisation (CSO) with base year 1948-49 for the estimates at constant prices.
These estimates at constant (1948-49) prices along with the corresponding estimates at current prices and the accounts of the Public Authorities were published in the publication, 'Estimates of National Income' in 1956.
With the gradual improvement in the availability of basic data over the years, a comprehensive review of methodology for national accounts statistics has constantly been undertaken with a view to updating the data base and shifting the base year to a more recent year.
The base years of the National Accounts Statistics series have been shifted from 1948-49 to 1960-61 in August 1967; from 1960-61 to 1970-71 in January 1978; from 1970-71 to 1980-81 in February 1988; and from 1980-81 to 1993-94 in February 1999. Thereafter it was changed to 2004-05 in 2006.
The government will also be revising the base year for consumer price index (CPI), wholesale price index (WPI) and index of industrial production (IIP).
The new series of IIP and WPI are likely to be released by March 2016. The growth in the new series of IIP and WPI would be incorporated in the provisional estimates of 2014-15, to be released in May 2016.