Base year for GDP changed, Indian economy grew at 6.9%; P Chidambaram says credit is all UPA’s

A change in base year for computing national accounts pushed up the economic growth rate for 2013-14 to 6.9 per cent…

Indian economy, Indian economy growth, Indian economy 2015, CAD, CAD 2015, economic growth, economic growth 2015, current account deficit, current account deficit news

A change in base year for computing national accounts pushed up the economic growth rate for 2013-14 to 6.9 per cent, while earlier estimate on the basis of old series was 4.7 per cent.

Similarly, the economic growth rate for 2012-13 has been revised upwards to 5.1 per cent, compared with 4.5 per cent estimated earlier.

These changes follow a revision in the base for calculating national accounts to 2011-12 from 2004-05.

The base year was last revised in January 2010.

“Real GDP or GDP at constant (2011-12) prices stands at Rs 92.8 lakh crore and Rs 99.2 lakh crore, respectively for the years 2012-13 and 2013-14, showing growth of 5.1 percent during 2012-13, and 6.9 percent during 2013-14,” said a release.

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The change in the base year and also the conceptual framework, the release said, “will improve ease of understanding (data) for analysis and facilitate international compatibility”.

The new series, it said, will also affect a wide range of indicators like trends in public expenditure, taxes and public sector debt that are conventionally analysed in terms of their ratios to nominal GDP.

However, the release said, the level of revision in the present base revision “is not large enough to affect any of these ratios significantly”.

Moreover, the official press note said that the Gross Domestic Product (GDP) at factor cost will no longer be discussed, instead Gross Value Added (GVA) will be analysed in releases.

“As is the practice internationally, industry-wise estimates will be presented as GVA at basic prices, while GDP at market prices will henceforth be referred to as GDP.

Kamlesh Rao, CEO, Kotak Securities:
The CSO has released the revised GDP numbers for the past two years, taking 2011-12 as the base year. The revisions happen every 5 years. The 2012-13 GDP growth has been revised to 5.1% from 4.5% earlier and the 2013-14 number has been revised to a substantial 6.9% as against 4.7% earlier. This will increase the size of economy.
Markets fell on the last day of the week largely on the back of worse-than-expected asset quality numbers declared by banks – both public and private. The Coal India OFS attracted bids of 1.2x the size of the issue and that entailed an amount of about Rs.240bn.
The fiscal deficit has come in at Rs 5.32 lakh crore during April-December of 2014-15, surpassing a full-year’s BE of Rs 5.31 lakh-crore by 0.2%. For the corresponding period last year, the deficit was 93.9% of the full-year BE. The higher deficit is largely because of the lower-than-expected revenues. For the first nine months of 2014-15,  tax revenue of the Centre has been Rs 5.45 lakh-crore, about 55.8% of the full-year BE of Rs 9.77 lakh-crore. For April-December last year, it was higher at 58.6% of the full-year target. Expenditure for the period stood at 68.9% of BE as against 69.9% in the corresponding period of FY14.
Going ahead, there are tail winds for the revenues in the form of higher dis-investment proceeds (including CIL), telecom spectrum sale and further income from the hike in excise duties for petro and diesel. Apart from these, the last quarter normally sees a large proportion of tax revenues accrue to the Government. However, in case of a revenue shortfall, the Government may need to resort to spending cuts, with a view to meet the fiscal deficit target of 4.1%.

Gross saving during 2011-12 is estimated at Rs 29.9 lakh  crore and the estimates for years 2012-13 and 2013-14 are Rs 31.8 lakh crore and Rs 34.8 lakh crore respectively.

The rate of Gross Capital Formation at constant (2011-12) prices, however, has decreased from 37.2 per cent in 2012-13 to 33.4 per cent in 2013-14.

It further added that the per capita income at current prices has been estimated at Rs 64,316, Rs 71,593 and Rs 80,388 for the years 2011-12, 2012-13 and 2013-14 respectively.

As per the new series, the nominal Net National Income (NNI) for 2011-12 stands at Rs 78.5 lakh crore, while the estimates for 2012-13 and 2013-14 are Rs 88.4lakh crore and Rs 100.6 lakh crore respectively, showing an increase of 12.7 per cent and 13.7 per cent respectively.

The Gross National Disposable Income (GNDI) at current prices is estimated as Rs 90.6 lakh crore for 2011-12, while the estimates for 2012-13 and 2013-14 stand at 102.2 lakh crore and Rs 116.0 lakh crore, respectively.

‘Revised GDP proves UPA put economy back on growth path’

Former Finance Minister P Chidambaram today said the revised GDP data, which has pegged the growth rate for 2013-14 at 6.9 per cent, conclusively establishes that the UPA government put the economy back on the growth path.

“The data released today and the other economic indicators conclusively establish that the UPA government succeeded in substantial measure on all the four objectives,” Chidambaram said in statement.

He said during his tenure as the Finance Minister since August 2012 till May 2014, the government was successful in achieving its objectives of fiscal consolidation, containing current account deficit (CAD), moderation in inflation and putting the economy back on the growth path.

“I am happy that the Government has released the revised GDP data. It should put an end, once and for all time, to the misconceived charge that the UPA government had mismanaged the economy,” he added.

The revised estimate of FY14 economic growth was based on a new calculation method of national accounts with base year changed to 2011-12, from 2004-05 earlier. Earlier the FY14 growth rate was projected at 4.7 per cent.

Also, the economic growth rate for 2012-13 has been revised upwards to 5.1 per cent, compared with 4.5 per cent estimated earlier.

“With the GDP data for 2012-13 and 2013-14, it will be clear that the 10 years of the UPA government recorded the highest decadal growth since Independence. I wish successor governments will aim to better the UPA’s record.

“I sincerely hope that the government’s leaders will stop repeating the jibe of sub-5 per cent growth in the last two years,” Chidambaram added.

He further said that there is much work to be done and the opposition will help the government.

“It is up to the government to reach out to everyone, build consensus, and work toward achieving higher growth in the years to come,” he said.

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First published on: 30-01-2015 at 19:03 IST