GDP growth faster since FY'13; new series as per global norms

New Delhi: The new method for calculating GDP growth reveals that the Indian economy has been growing at a faster rate since 2012-13 and it conforms to global standards, the government said on February 24.

"The numbers of GDP and growth, released under the new series, revealed that the economy has been growing at faster rate since 2012-13 than indicated by the old (2004-05) series, making room for greater flexibility in macroeconomic policy," Minister of State for Finance Jayant Sinha said.

"The methodology adopted in compilation of new series of national income conforms to the internationally accepted standards," he said in a written reply to the Rajya Sabha. The Central Statistics Office recently re-based the year of calculation, and revised the GDP numbers. After the adoption of new method, government has projected the real GDP growth (with 2011-12 as the new base) at 7.4 per cent in 2014-15, as against 6.9 per cent in 2013-14.

Apart from a change in base year from 2004-05 to 2011-12, the revised methodology includes private corporate performance as well as sales and service taxes, which have lifted growth for industrial and service sectors. Sinha said the calculation under new method in the 2011-12 series incorporates the recommendations of the System of National Accounts 2008 to the extent of data availability.

The System is a statistical framework, which gives a comprehensive, consistent and flexible set of macroeconomic accounts for policy making, analysis and research purposes. It has been produced and is released under the auspices of the United Nations, the European Commission, Organisation for Economic Co-operation and Development, the International Monetary Fund and the World Bank Group.

The new method includes changes such as measuring GDP at constant market price than at factor cost at constant prices, sector wise estimate of gross value added at basic prices instead at factor cost, comprehensive coverage of corporate sector manufacturing and services, Sinha said.

Besides, it will be based on inclusion of information accounts of stock brokers, stock exchanges, asset management companies, mutual funds, pension funds and regulatory bodies as well improved coverage of activities of local bodies and autonomous institutions, he added.