The financial progress image as per the brand new collection is totally different from the sooner base collection as a result of the out there data has been used otherwise to re-estimate the GDP figures primarily based on 2011-12 costs.
The newest collection numbers, launched by the federal government on Wednesday, lowered the expansion charges underneath the United Progressive Alliance (UPA) regime. The again collection between 2004-05 and 2011-12 revealed that financial progress charge in 2011-12 was down to five.2% from the sooner 6.6% that was arrived at with 2004-05 as the bottom yr. Even the expansion in 2010-11 has been revised down to eight.5% from 10.3%.
However, nearly all economists averred that the methodology deployed for the most recent collection numbers by Central Statistics Office (CSO) was consistent with that used within the reconstruction of 2011-12 collection by National Statistical Commission.
In spite of this, the data of the 2 statistical organisations are in sharp distinction. And the economists imagine the hole between the 2 has been brought on by the best way wherein the data has been used.
Madan Sabnavis, chief economist, Care Ratings, mentioned invariably in such “an exercise” the best way a commodity is used might change. This, he mentioned, altered the ultimate end result.
“The thing is when you are doing such an exercise, one should remember that we all have the same sets of goods and services. You don’t have prices of those goods and services. Plus, the ways in which we are using different commodities also changes. The things which were more important earlier may become less important or what was less important may become more important. So, when you are revising it you have to use different proxies and we have used different ways or combination,” he mentioned.
According to him, one such evident reinterpretation of data was for Telecom. Here, he mentioned, the most recent collection has considered the utilization or minutes of use of Telecom Companies rather than the variety of subscribers used earlier.
“For Telecom, earlier number of subscribers was considered. Now, they have changed it to a number of minutes used. Therefore, you have come out with a higher number and the picture has changed,” he mentioned.
DK Srivastava, chief coverage advisor, EY India, additionally doesn’t see any concern with the methodology however mentioned new or extra data present progress numbers in a unique mild.
“National Statistical Commission had used the econometric methodology, whereas the one used by Central Statistics Office (CSO) is the same methodology which was used to construct the series of 2011-12. What they have done is utilised the richer database. So, in terms of methodology, I think it is consistent with the methodology that was used for constructing the 2011-12 base series. The only thing is that they have used new or additional data,” he mentioned.
Srivastava mentioned the data reinterpretation various from sector to sector and a lot of the adjustments are associated to manufacturing and a number of the non-public sectors.
“We are yet to examine the reasons for the difference that have come about. We have to look at the sectoral composition of the different sectoral growth rate. The two sectors where the main difference has arisen is Telecommunication and financial services,” he mentioned.
According to him, monetary Companies data have undergone a drastic change within the new collection as a result of the central financial institution is seen as an “intermediary”.
“What has been done is that the role of the central bank – Reserve Bank of India (RBI) – has been created as only intermediary and so it does not contribute to the final output. Change has occurred on account of this. In the older series, there was some positive contribution stated (by RBI) which might have been taken off,” he mentioned.
Care Ratings’ Sabnavis mentioned it was all a matter of how the data was learn or utilised within the computation of the brand new collection.
For occasion, he mentioned, if the Telecom progress was calculated in the identical means as manufacturing numbers had been accomplished, it will have proven a decline in progress.
“I would say suppose you look at Telecom growth, on the basis of balance sheet data, just like the P&L account which you are using for manufacturing. It gives a different picture because Telecom Companies, even though the usage has gone up, their profitability has come down. Therefore, their valuation will be down. That’s what I am saying their assumption is perfectly alright but each will make their own assumption. I can improve the methodology, say for manufacturing you are using value-added based on P&L account of some five lakh Companies. So, if I use the same for Telecom, then value-addition has fallen because these (Telecom) Companies are making losses. Even when their usage has gone up, they are not making money on that,” mentioned the chief economist of Care Rating.
- The issues which had been extra necessary earlier might develop into much less necessary or what was much less necessary might develop into extra necessary
- Way a commodity is used might change and this has altered the ultimate end result