There is a better way to capture the growth picture

Source: The post is based on the article “There is a better way to capture the growth picture” published in “Indian express” on 26th September 2023.

Syllabus: GS3- Economy- Indian economy

News: The author discusses India’s goal to become a $5 trillion economy and the need for accurate GDP measurement. The article emphasizes updating the base year for national accounts statistics, which is overdue, to accurately reflect new economic activities and investments.

Is India’s GDP measurement accurate?

The author talks about the need for accurate GDP measurement in India. Currently, India’s GDP base year is 2011-12, making it outdated. An outdated base year might not capture new economic activities and investments made in recent years.

How can GDP measurement be improved?

Update Base Year: The GDP’s base year needs updating from 2011-12 to accurately capture new economic activities.

Use New Data Sets: Leveraging newly created databases from GST and digital payments will help in obtaining more accurate and current economic data.

Implement Supply Use Tables: These are critical for the validation of national accounts statistics, aiding in reconciling discrepancies in income and expenditure estimates.

Initiate Revision Process: Ministry of Statistics and Program Implementation (MoSPI)  and National Statistical Commission need to initiate the base year revision process immediately to avoid further delays and reflect the economy’s true status.

Form Advisory Committees: MoSPI should form committees with experts from various fields to guide the revision of the national accounts statistics efficiently and accurately.

Publish Relevant Surveys: Results of surveys like the consumer expenditure survey need to be published to assist in the base revision exercise.

Why is accurate measurement of GDP important for India’s economic goals?

Reflects True Growth: It provides a true representation of India’s economic growth and development, considering the substantial investments made in the last decade.

Captures New Activities: A precise GDP measurement ensures that new economic activities and private initiatives are adequately included, providing a realistic economic picture.

Informs Policy: Accurate data is pivotal for effective policymaking and strategic planning, helping in the realization of India’s goal to become a $5 trillion economy.

Attracts Investments: Reflecting the true economic status can enhance India’s global image and potentially attract more foreign investments.

Citizen Participation: It enables more informed and active participation from citizens in economic activities and discussions, fostering cooperation towards national economic goals.