​​​
  1. It’s the deflators, mainly

It’s the deflators, mainly

The debate over whether the new GDP series are kosher will carry on despite the RBI dataset on 2.4 lakh unlisted firms, reports Saikat Neogi in New Delhi.

By: | Updated: June 20, 2016 7:23 AM
Although these firms grew faster than listed firms, their value addition is a small fraction. (Reuters) Although these firms grew faster than listed firms, their value addition is a small fraction. (Reuters)

The debate over whether the new GDP series are kosher will carry on despite the RBI dataset on 2.4 lakh unlisted firms, reports Saikat Neogi in New Delhi. Although these firms grew faster than listed firms, their value addition is a small fraction. While the debate hotted up once again when the provisional data for FY16 was released earlier this month, as many analysts have pointed out, getting GDP data from the demand side has always been less reliable as compared to that from the supply side.

The other issue is that the discrepancy in demand and supply side estimates of GDP tends to be higher in terms of constant prices (see graphic). While all data is collected in current prices, this is later deflated to constant prices. Under normal circumstances, this is not too much of a problem, but with commodity prices falling so rapidly, the divergence between CPI and WPI has made calculating deflators difficult. With WPI rising again, the good news is, the deflators will be more realistic in FY17.

deflators

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Go to Top