1. New factory data method reason for growth spurt

New factory data method reason for growth spurt

The Central Statistics Office is now following a revised methodology to capture manufacturing sector...

By: | New Delhi | Updated: February 11, 2015 8:36 AM
manufacturing sector, manufacturing sector growth, GDP growth, GDP growth in India, GDP growth news

The advance estimates for GDP growth for 2014-15 had pegged manufacturing sector growth at 6.8 per cent, as against 5.3 per cent last fiscal. (Reuters)

The Central Statistics Office is now following a revised methodology to capture manufacturing sector productivity through an enterprise rather than an establishment approach, which is partly responsible for the sharp spurt in performance of the sector.

“We have moved from the earlier establishment approach to measure manufacturing sector growth to an enterprise approach. Under this, functions such as those performed in head offices and ancillary activities such as marketing and financial operations of a manufacturing unit is also captured under manufacturing sector,” said Ashish Kumar, director general, CSO, adding that the data is now available on the MCA21 database.

The advance estimates for GDP growth for 2014-15 had pegged manufacturing sector growth at 6.8 per cent, as against 5.3 per cent last fiscal.

Though in line with the more robust GDP estimate of 7.4 per cent this fiscal, the data is completely at odds with the index of industrial production that grew 2.2 per cent in the first six months of the fiscal and indirect tax collections that remain lower than estimated.

The MCA 21 database has provided information on over 5 lakh registered companies to the CSO, which earlier depended only on data from the IIP and the annual survey of industries (ASI) to measure manufacturing sector growth.

“The adoption of the MCA21 database has led to a higher share of mining and manufacturing in GDP and consequently a higher growth rate relative to the 2004-05 base year series,” said a report by Bank of America Merill Lynch. Consequently, some companies that were earlier being covered under the trade category are now correctly being reported under the mining and manufacturing category, the report added.

A research note by Standard Chartered said, “… the GDP series now captures in-house services like marketing as a part of manufacturing…, instead of categorising it under services.” It added that the ASI did not fully capture services-sector firms such IT.

RECLASSIFIED

* The CSO has moved from the ‘establishment’ approach to the ‘enterprise’ approach while collecting manufacturing sector data
* The data is available on the MCA21 portal, which has been used by the CSO for the exercise

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Tags: GDP Growth
  1. P
    pagushona
    Feb 11, 2015 at 11:15 am
    If something which was a part of services is being shifted to manufacturing, then a rise in manufacturing should be offset by a fall in services. Why should overall GDP growth go up?
    Reply

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