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New UserCSO to review impact of cement, steel on growth
16 Jan 2017
National accounts for the eight years starting 2004 are unlikely to be revised in
line with a controversial new methodology any time soon because a highprofile committee
has asked the statistics office to reexamine the impact of cement and steel on the growth
numbers.
The new series of GDP, based on the globally accepted market prices methodology, is
available from 201112. Updating the numbers for the eight previous years could help to
explain the jump in growth following the switch to the new series.
After the new series was introduced, FY14 growth was amended to 6.9%, up from 4.7%
estimated initially. For FY13, growth was revised to 5.1% from 4.5%. In FY16, GDP growth
was pegged at 7.6% even as the Index of Industrial Production gained only 2.4%, raising
concerns about the data. The data for the previous years will not be made public until the
revised numbers compiled by the Central Statistics Office are examined again by the
committee comprising officials from the finance ministry, Niti Aayog and other experts.
“When we looked at the back series, we saw that the GDP sharply went up when cement and steel did well and viceversa. We have
asked CSO to remove the impact of these two from manufacturing so as to avoid double counting,” said an official, who was present at a
meeting of the committee. The impact on growth was as large as 2.53 percentage points, the official said.
The construction sector is not directly measured in the national accounts and is estimated using inputs such as cement and steel
consumption. These two inputs are also used to calculate manufacturing growth, based on data from company balance sheets, which may
have resulted in double counting.
ET had reported in August that a highprofile committee will scrutinise the GDP back series data before the statistics office puts it out in the
public domain, hoping to avoid further controversy over the national accounting numbers. “We have been asked to again look into the
corporate data because we don’t have data from the Ministry of Corporate Affairs for calculating back series and were using alternative
databases like CMIE,” said an official from CSO. CMIE (Centre for Monitoring Indian Economy) is a Mumbaibased business information
company.
The exercise may be delayed further because the CSO is preparing the second advance estimates of national income for 201617 and the
thirdquarter GDP data, which are due on February 28. “Another brainstorming session will happen after they examine the new numbers
and till then, we can’t make the back series data public because they will decide after analysing the report if we can,” said another CSO
official.
The back series will align the GDP numbers with the new methodology put in place by the CSO in 2015. It will help compare recent GDP
growth over a longer period since the new system revised the base year to FY12 from FY05, besides introducing a change in methodology
and sources of data collection.
The government doesn’t want similar doubts to cloud the data for the earlier years as it could stoke another round of controversy if growth
during the term of the previous government is shown to have been slower than recorded.
Source: Economic Times