The Modi government, engineering an economic rebound with a slew of reforms, on Friday unveiled a new statistical method to calculate the national income with a broader framework that turned up a pleasant surprise: GDP in the past year 2013-14 grew 6.9% instead of the earlier 4.7%.
Apart from marginally reducing Rs. 10,000 crore from the economy’s size, the data that relies on value added at various stages of the production chain rather than a toting up of expenditure covers everything from farm-level livestock to mega infrastructure projects and trendy smart-phones to capture activity across the economy.
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 113.55 lakh crore in the old data series.
Similarly, the annual average income (per capita income) now stands at Rs 80,338 compared to earlier estimates of Rs 74,380. The economic growth rate for 2012-13 has also been revised upwards to 5.1% from 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, includes 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 output information from about 5 lakh 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 incorporates results of recent national sample surveys such as those on enterprises, unemployment, debt and investment, situation assessment of farmers and survey of land and livestock holdings.
On impact of the new data on fiscal deficit, which is calculated as a percentage of the GDP, chief statistician TCA Anant said: "The size of economy has marginally declined to Rs 113.45 lakh crore in 2013-14 under the new series from Rs 113.55 lakh crore (under the old series)."
Former finance minister P Chidambaram said that latest data “should put an end, once and for all time, to the misconceived charge that the UPA government had mismanaged the economy.”
“With the GDP data for 2012-13 and 2013-14, it will be clear that the 10 years of the UPA government recorded the highest decadal growth since Independence,” Chidambaram said.
Minister of State for Finance Jayant Sinha on Friday said the Indian economy has potential to become a $4-5 trillion economy from its current level of about $2 trillion in the next 10-12 years.
"You might not find a better opportunity to create wealth. It's great time to invest in India...We are going to take India's $2 trillion economy to $4-5 trillion economy in the next 10-12 years," Sinha said at an event organised by the Indian Private and Venture Capital Association (IVCA) here.
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) 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 grew 7.4% last year, its slowest in 24 years. The Chinese economy, however, will continue to be big in size as its GDP) reached $10.4 trillion this year, more than five times India’s economy.