The new Gross Domestic Product (GDP) series is set for a major overhaul with the government proposing various changes, including the adoption of the Classification of Individual Consumption according to Purpose (COICOP) 2018 for the compilation of private final consumption expenditure.
The Ministry of Statistics and Programme Implementation (MoSPI) on Tuesday released second discussion paper proposing methodological refinements for compiling GDP from the expenditure approach, as country prepares to shift to a new base year of 2022-23. The first discussion paper on changes in compilation of aggregates based on production/income approach was released on November 21.
The new national accounts series, set for official release on February 27 aims to better capture the evolving structure of the economy and for greater accuracy and international comparability.
Major changes
With the adoption of COICOP 2018, tailoring will be included in the Clothing and Footwear division, power sockets, wiring flex will be included in Division 04 (Housing, water, electricity, gas and other fuels).
“COICOP is an internationally recognized standard developed by the United Nations Statistics Division to categorize household consumption expenditures based on their functional purpose. The adoption of COICOP enhances comparability as well as analytical usefulness. The 2011-12 series is based on COICOP 1999, which was the latest at the time of last base revision,” the discussion paper states.
Govt proposes moving away from commodity flow approach
The government also proposed moving away from heavy dependence on the commodity flow approach for private final consumption expenditure towards greater use of the Household Consumption Expenditure Surveys, administrative data like E-Vahan vehicle registration, and targeted studies on milk utilization and road transport.
“Due to unavailability of robust benchmark estimates or relevant datasets, 34 items are proposed to be compiled using the commodity flow approach. The theoretical framework of commodity flow remains the same as used in 2011-12 series. However, unlike the 2011-12 series, the revised series proposes to apply dynamic rates and ratios in commodity flow,” the discussion paper reads.
In the revised series, the government has proposed to integrate the supply and use table with compilation of annual accounts to ensure that discrepancies are limited in the early estimates and finally eliminated when full set of data becomes available at the time of final estimates. Currently, the ministry publishes statistical discrepancy in the Expenditure estimates to match with production estimates.
The supply and use tables record how supplies of different kinds of goods and services originate from domestic industries and imports and how those supplies are allocated between various intermediate or final uses, including exports. “The supply and use tables provide an accounting framework within which the product flow method of compiling national accounts, whereby the total supplies and uses of individual types of goods and services have to be balanced with each other, can be systematically exploited,” the discussion paper reads.
The ministry invited feedback from various stakeholders by January 7.
