ECONOMIC NOTES EPW Research Foundation

understanding of national accounts that

New Series of National Accounts has developed in the SNA.

A Review What’s New?

The definitions used to calculate GVA
have changed with the introduction of
EPW research foundation GVA at basic prices in accordance with
SNA requirements (see Annexure 1 for a

T
The new series of national he new series of national accounts discussion). For the first time, data is
accounts released by the with a revised base year of 2011– classified using institutional categories,
12, released by the Central Statis- which distinguish between components
Central Statistics Office has
tics Office (CSO) on 30 January, is the within the institution (head offices,
made a number of conceptual product of substantial revisions in the ancillaries, etc), as opposed to enter-
changes and has tapped new methodology of compilation of data, its prises as units that was used previously.
sources of data. This note classifications including the presenta- New data sources are now employed,
tion of data for the first time for insti- which are recent, and hitherto not used
presents a discussion of the key
tutional categories, and choice of new to estimate national accounts in India. A
modifications in this new series of and more sources. The base year of noteworthy new source is MCA21, which
national accounts. the national accounts is revised from has data from the e-governance initia-
time to time, but this time the CSO tive of the Ministry of Corporate Affairs
has also revised the methodology of (MCA). This data covers the private cor-
calculating these statistics in line with porate sector in mining, manufacturing,
requirements of the System of National and services comprehensively. MCA21
Accounts (SNA), an internationally comprises annual accounts of compa-
accepted standard. nies, statutorily filed online with the
This has meant that there have been MCA. This data allows for sector-wise
substantial changes in the overall savings and investment estimates that
growth rates of the Indian economy for promise to be better than the previous
the past three years. According to the method of relying on Reserve Bank of
previous, 2004–05, series of national India (RBI) sample data.
accounts, real growth of gross value
added (GVA) at factor cost was 4.7%, Key Macroeconomic Aggregates
and 5.0% for gross domestic product Table 1 (p 75) presents a synoptic view
(GDP) at market prices for the year of the important macroeconomic aggre-
2013–14. While these growth rates gates from the new series of the National
according to the 2011–12 series in the Accounts Statistics (NAS). Simultaneously,
same year went up to 6.6% and 6.9%, it makes a comparison of similar data
respectively. The numbers for 2012–13 available from the 2004–05 series. These
in the new series, however, improved aggregates are nominal numbers, not all
only marginally from the old one. GVA of which have real counterparts. Some
at factor cost went from 4.5% to 4.9%, of the important ones having constant
and GDP at market prices went from price numbers are presented in Table 2
4.7% to 5.1% for 2012–13. Why has this (p 75). A few key elements of these
been so? Did the economy really surge macroeconomic aggregates are worth
ahead in 2013–14? noting. Though we have placed in the
These and other questions pertaining front row the traditional measure of
to sector-wise growth rates, which have GVA at factor cost, the government has
also changed, need to be raised and preferred to be relegated it to a state-
scrutinised. In this note, we present key ment at the end of the press release. As
aspects of the new data series and issues pointed out in the Annexure we perceive
that need to be addressed in the new this as an important economic variable
methodology. This note is also accom- from which the subsequent aggregates
panied by Annexure 1 (p 77), which flow and therefore, it is necessary to note
presents a brief history of the conceptual it at the outset. The other important
74 FEBRUARY 14, 2015 vol l no 7 EPW Economic & Political Weekly
EPW Research Foundation ECONOMIC NOTES

aggregates which follow are GVA at manufacturing sector, the MCA21 data- overall growth is, however, still diffi-
basic prices and GDP (i e, equivalent to base has been used to supplement the cult to discern.
the conventional GDP at market prices) information available in the Annual Sur- The other change is to do with the
with their component items of indirect vey of Industries (ASI), which was used estimates of savings and investments,
taxes and subsidies. in the older series. which show an increased share for the
Table 1: Macroeconomic Aggregates at Current Prices (Rs crore) private corporate sector, while a decrease
2004–05 Series 2011–12 Series in share of household savings. This is
Item 2011–12 2012–13 2013–14 2011–12 2012–13 2013–14 discussed later in this note.
1 Gross Value Added at Factor Cost 83,91,691 93,88,876 1,04,72,807 82,06,398 92,63,138 1,04,87,074
(15.8) (11.9) (11.5) - (12.9) (13.2)
What Do Other Indicators Say?
2 Production Tax 1,47,923 1,76,181 –

3 Production Subsidy
(15.5)
4227
(6.0)
(19.1)
4565
(8.0)
–
– } -10,852
} }-11,087

(2.2)
-9,934

-(10.4)
Other macroeconomic indicators do not
seem to corroborate findings of the new
series of national accounts. For instance,
4 Gross Value Added at Basic Prices [1+2-3] 85,35,387 95,60,492 – 81,95,546 92,52,051 1,04,77,140
the infrastructure index for mining has
(15.8) (12.0) – – (12.9) (13.2)
5 Indirect taxes 8,19,733 9,77,322 – 8,86,969 10,57,442 11,97,938
registered a decline of (-)0.6% during
(17.6) (19.2) – (19.2) (13.3) 2013–14, whereas real GVA growth in
6 Subsidies 3,45,398 424533 – 2,50,503 3,20,953 3,30,022 the new series says the sector grew by
(20.8) (22.9) – (28.1) (2.8) 5.4% that year. Likewise, the index of
7 Gross Domestic Product (GDP) [ 4+5-6] 90,09,722* 1,01,13,281* 1,13,55,073* 88,32,012 99,88,540 1,13,45,056
industrial production (IIP) was almost
(15.7) (12.2) (12.3) - (13.1) (13.6)
Figures in brackets represent percentage changes over previous years. * At market prices. stagnant during the same year with
a -0.1% growth preceded by a growth
Table 2: Macroeconomic Aggregates at Constant Prices (Rs crore) of just 1.1% in 2012–13, but GVA growth
Item 2004–05 Series 2011–12 Series
2011–12 2012–13 2013–14 2011–12 2012–13 2013–14 in 2013–14 was 6.3% and in 2012–13
1 Gross Value Added at Factor Cost 52,47,530 54,82,111 57,41,791 82,06,398 86,09,516 91,78,444 it was 5.3%. These numbers, and the
(6.7) (4.5) (4.7) – (4.9) (6.6) lack of any corroborative evidence so
2 Gross Value Added at Basic Prices 53,37,165 55,81,075 – 81,95,546 85,99,224 91,69,787 far, do raise misgivings about the new
(6.7) (4.6) – – (4.9) (6.6)
NAS data.
3 Gross Domestic Product 56,33,050* 58,99,847* 61,95,842* 88,32,012 92,80,803 99,21,106
(6.6) (4.7) (5.0) (5.1) (6.9)
4 Gross National Income (GNI) at factor cost 52,01,163 54,16,659 56,73,857 – – –
Saving and Investment
(6.9) (4.1) (4.7) The most noteworthy aspect of the NAS
5 GNI 55,86,683* 58,34,395* – 87,55,188 91,72,925 98,00,813 data generated by the new series con-
(6.9) (4.4) (4.8) (6.8)
cerns the sector-wise profile of domestic
Figures in brackets represent percentage changes over previous years. * At market prices.
saving and investment. This has come
What Changed? Similarly, the “enterprises approach” about, as explained earlier, due to the
The sizeable improvement in growth as adopted for mining and manufacturing use of MCA21 data instead of the RBI
per the new 2011–12 series for 2013–14 using MCA21 data to account for head sample statistics for the private corporate
and the marginal improvement for offices, ancillary activities, etc, were sector. Other components of estimation
2012–13 is the first issue we deal with. previously not covered under the ear- have remained the same. For gross capi-
The change in growth of GVA from lier used “establishment approach”. To tal formation (GCF), aggregate estima-
2012–13 to 2013–14 according to the new what extent the use of fresh data and tion by the commodity-flow method con-
series is mainly in four sectors: agricul- classifications has contributed to the tinues to be used. From this aggregate,
ture (from 1.2% to 3.7%), mining (-0.2% changes in sector-wise growth and fresh estimates of corporate sector GCF
to 5.4%), construction (-4.3% to 2.5%) Table 3: GVA Growth at Constant Prices (in percentages)
and trade, repair, hotels and restaurants Industry 2004–05 Series 2011–12 Series (New)
(10.3% to 13.3%) (see Table 3). While if 2012–13 2013–14 2012–13 2013–14
1 Agriculture, forestry and fishing 1.4 4.7 1.2 3.7
one compares figures for 2013-14 between
2 Mining and quarrying -2.2 -1.4 -0.2 5.4
the two data series, distinct changes are
3 Manufacturing 1.1 -0.7 6.2 5.3
seen in three sectors. Mining was -1.4% 4 Electricity, gas, water supply and other utility services 2.3 5.9 4.0 4.8
in the old series, it increased to 5.4% 5 Construction 1.1 1.6 -4.3 2.5
according to the new series, manufac- 6 Trade, repair, hotel and restaurants 4.5 1.0 10.3 13.3
turing increased from -0.7% to 5.3%, 7 Transport, storage, communication and services related to broadcasting 6.0 6.1 8.4 7.3
and trade, repair, hotels and restaurants 8 Financial, real estate and business services 10.9 12.9 8.8 7.9
increased from 1.0% to 13.3%. For some 9 Community, social and personal services 5.3 5.6 8.8 7.9
of these sectors fresh data from the 10 Total GVA 4.5 4.7 4.9 6.6
Estimates for the earlier series (2004–05 series) have been derived from GVA at factor cost, while estimates for the 2011–12
private corporate sector have been used series have been derived from GVA at basic prices.
at least partially, if not wholly. For the Source: Central Statistics Office.

Economic & Political Weekly EPW FEBRUARY 14, 2015 vol l no 7 75

ECONOMIC NOTES EPW Research Foundation

combined with public sector investment 40% in the revised Graph A: Sector-wise Shares (in %)
are deducted to arrive at the residual series for 2012–13. Cor- 80
figure for household sector investment respondingly, because 70
in physical assets. This is combined with of the residual method,
fresh saving estimates of the private cor- there has occurred a 60 Public sector
Private sector
porate sector and the public sector and sharp reduction in the 50
Household sector
financial savings of the household sector relative share of the
40
to derive aggregate domestic savings. household sector from
As a result of these changes, the rela- 46% in the old series 30
tive shares of sectors in domestic saving to 38% in the revised
20
and GCF have undergone some signifi- series for the same
cant changes. First, because of MCA21 year; this share has fur- 10
data, the savings and GCF of the private ther slipped to 34% in
0
corporate sector have expanded rather 2013–14 while the corpo- 2011-12 2012-13 2013-14 2011-12 2012-13 2013-14 2011-12 2012-13 2013-14
sizeably. In absolute terms, revised sav- rate sector share has Gross savings Gross capital formation Gross value added
at basic prices
ings of the private corporate sector have remained at around 40%.
risen from the old series to the new by Table 6: Gross Value Added at Basic Prices —
28.5% for 2011–12 and by 47.4% for Institutional Classification 2011–12 Series (current prices, Rs crore)
Item 2011–12 2012–13 2013–14
2012–13. In terms of relative shares, the The institutional categories used have
Public Sector 16,72,236 18,34,463 20,60,276
sectors share was around 23% in 2011–12 been set out as per the recommenda- (9.7) (12.3)
and 2012-13, and this increased to 29% tions of the SNA. There are data given Private Corporate Sector 28,44,259 32,52,925 37,02,271
in 2011–12, 31% in 2012–13, and further separately for financial and non-finan- (14.4) (13.8)
to 35% in 2013–14. It is in the estimation cial corporations and again, separately Household Sector 36,79,050 41,64,663 47,14,592
(13.2) (13.2)
of GCF that a more significant increase for these corporations in the public and
Gross Value Added 81,95,545 92,52,051 1,04,77,139
has occurred for the private corporate private sectors. Similar data are given at basic prices (12.9) (13.2)
sector. In absolute terms, GCF of the for the household sector. Figures in the bracket represent percentage change over
sector has increased from the old series An attempt has been made in Table 6 previous year.

to the new by 28.5% for 2011–12 and by to present a summary picture of the dis-
45.4% for 2012–13. The relative share of tribution of GVA by the three traditional using the new series. It is possible to
the private corporate sector has shot up categories of public sector, private cor- make a comparison of the relative
from 28.5% in the old series of GCF to porate sector, and household sector shares in GVA with their relative shares
Table 4: Gross Saving by the Type of Institution (Rs crore) in domestic savings (Table 4) and GCF
Item 2004–05 Series 2011–12 Series (Table 5). A comparison of these relative
2010–11 2011–12 2012–13 2011–12 2012–13 2013–14
shares is depicted in Graph A. The key
Public Sector 2,01,268 [2.2] 1,11,295 [1.1] 1,17,919 [1.0] 1,25,188 [1.4] 1,69,210 [1.7] 1,79,132 [1.5]
results described here tell us about the
(7.7) (3.9) (3.9) (4.2) (5.3) (5.2)
Private Corporate Sector 6,20,300 [6.7] 6,58,428 [6.4] 7,13,141 [6.1] 8,54,124 [9.4] 9,95,930 [9.7] 12,31,624 [10.6]
broad structures of saving and invest-
(23.7) (23.3) (23.4) (28.5) (31.3) (35.4) ment in the economy:
Household Sector * 18,00,174 [19.5] 20,54,737 [19.9] 22,12,414 [19.1] 20,14,613 [22.2] 20,16,122 [19.7] 20,65,179 [17.8] (i) The household sector is the one
(68.7) (72.7) (72.7) (67.3) (63.4) (59.4) which has a much higher share in savings
Gross Savings 26,21,742 [28.4] 28,24,460 [27.3] 30,43,474 [26.2] 29,93,925 [33.0] 31,81,262 [31.1] 34,75,935 [30.0]
(59% to 67%) than its share in GVA
(100.0) (100.0) (100.0) (100.0) (100.0) (100.0)
Gross National Disposable
(around 45% in each year). The private
Income (GNDI) 92,37,794 1,03,46,596 1,16,08,073 90,60,090 1,02,21,858 1,16,01,087 corporate sector has almost similar shares
Figures in the bracket represent sectoral shares in percentages. Figures in the square bracket represent percentage rates of savings in GVA and saving. The public sector has
to GNDI. * Household sector savings for the 2011–12 Series includes valuables.
the least share in saving, which is lower
Table 5: Gross Capital Formation by the Type of Institution (Rs crore) than its relative share in GVA.
Item 2004–05 Series 2011–12 Series (ii) In GCF, the private corporate sector
2010–11 2011–12 2012–13 2011–12 2012–13 2013–14
and the public sector have much higher
Public Sector 6,56,448 [8.4] 6,95,835 [7.7] 8,21,962 [8.1] 6,74,395 [7.6] 7,19,426 [7.2] 9,02,048 [8.0]
(24.5) (23.0) (25.3) (21.2) (21.5) (25.5) shares in GCF than their relative shares
Private Corporate Sector 9,97,816 [12.8] 9,13,282 [10.1] 9,25,481 [9.2] 11,73,855 [13.3] 13,46,038 [13.5] 14,29,734 [12.6] in GVA. The household sector, though,
(37.2) (30.1) (28.5) (36.8) (40.2) (40.3) accounts for the largest share in savings,
Household Sector 10,26,315 [[13.2] 14,22,541 [15.8] 14,95,283 [14.8] 13,37,552 [15.1] 12,84,620 [12.9] 12,12,302 [10.7]
(38.3) (46.9) (46.1) (42.0) (38.3) (34.2)
has a share in total GCF lower than that
Gross Capital Formation* 26,80,579 [34.4] 30,31,658 [33.6] 32,42,726 [32.1] 31,85,802 [36.1] 33,50,084 [33.5] 35,44,084 [31.2] of private corporate sector.
(100.0) (100.0) (100.0) (100.0) (100.0) (100.0) (iii) These results confirm the widely-
Gross Domestic held view regarding the surplus and def-
Product (GDP) 77,84,115 90,09,722 1,01,13,281 88,32,012 99,88,540 1,13,45,056
Figures within brackets represent sectoral shares in percentages. Figures within square brackets represent rates of Gross
icit sectors in investment and investible
Capital Formation to GDP in percentages. * Gross Capital Formation here does not include valuables. resources in the economy.
76 FEBRUARY 14, 2015 vol l no 7 EPW Economic & Political Weekly
EPW Research Foundation ECONOMIC NOTES
References SNA system, the basic output aggregate is GDP small industries, administrative subsidies to
CSO (2012): National Accounts Statistics: Sources measured at purchasers’ prices. These pur- corporations or cooperatives, etc.
and Methods, Central Statistics Office. chasers’ values include indirect taxes net of Thus, the basic price receivable by the
MOSPI (2009): Report of the High Level Committee on subsidies. It is in the classification of indirect producer from the purchaser for a good or
Estimation of Saving and Investment, Ministry of
Statistics and Programme Implementation, Gov- taxes (net of subsidies) that distinguishes the service covers both factor cost and the taxes on
ernment of India. SNA 1993 and SNA 2008 from the SNA 1968. The production (net of subsidies on production),
RBI (2008): State Finances: A Study of Budgets of two former SNA s classify indirect taxes (net of which are incurred before the product is ready
2008-09, Reserve Bank of India, December. subsidies) into two categories: (i) indirect for sale; it is thereafter that indirect taxes
SNA (1968): A System of National Accounts, Studies taxes on production (net of subsidies on pro- on products are levied (except valued added
in Methods, Series F, No 2 Rev 3, United Nations.
duction) and (ii) indirect taxes on products tax, VAT).
– (1993): System of National Accounts 1993,
United Nations. (net of subsidies on products). The SNA 1968
– (2008): System of National Accounts 2008, made no such distinction, and covered all GDP at Market Prices
United Nations. indirect taxes under one bracket, whether According to the 1993 and 2008 SNAs, GDP at
levied on units of commodities such as excise market prices is the true measure of GDP cover-
Annexure 1: New Series of National Accounts duties, sales taxes, and customs duties are, or ing all indirect taxes net of all subsidies. They
— A Background Note on the Genesis on production activities involving the employ- recognise that such GDP is equivalent to the
The government’s press note on the release of ment of land, labour and the use of fixed assets sum of GVA at factor cost plus all taxes on prod-
National Accounts Statistics (NAS) revising the or on general business activities attracting ucts (net of product subsidies) plus all taxes on
base year from 2004–05 to 2011–12, states that business licence fees, transaction (e g, stamp) production (net of production subsidies)
apart from a shift in the reference year for duties, and real estate taxes. Extending the above logic, SNA 2008 (p 103)
measuring real growth, conceptual changes have GVA at basic prices includes the contribution makes a distinction between GDP and value
been incorporated as recommended by the inter- of factors of production (land, labour, capital, added in these terms:
national guidelines on the subject, which have and entrepreneurship) in the production proc- Value added is of analytical interest because
resulted in comprehensive revisions in the meth- ess and the amount appropriated by the gov- when the value of taxes on products (less
odology of compilation, in adoption of revised ernment in the form of taxes on production (net subsidies on products) is added, the sum of
classification systems including the presentation of subsidies on production). These taxes on pro- value added for all resident units gives the
for the first time of data for the institutional duction are said to be taxes levied on some value of gross domestic product (GDP).
categories, and in the inclusion of new and more aspect of a business or the other. In the Indian At the same time, the same SNA (2008:104)
recent data sources. This reference to interna- NAS, some examples of taxes on production concedes that “the underlying rationale behind
tional guidelines has an interesting background. specified are: land revenue, stamps and regis- the concept of gross domestic product (GDP) for
The compilation practices of India’s NAS have tration fees, and profession taxes. Subsidies on the economy as a whole is that it should meas-
always broadly followed the United Nations Sys- production are: subsidies to the railways, input ure the total gross value added from all institu-
tem of National Accounts (SNA). The UN SNA subsidies to farmers, subsidies to village and tional units resident in the economy”. Thus, the
underwent periodic changes in 1968, 1993 and
2008. The presentation of accounts in India’s NAS
in recent years has generally conformed to the
standards set in SNA 1968, but the compilation
practices in regard to sector-wise data were
changed to cover some of the recommendations
of SNA 1993 to the extent that data is available
(CSO 2012: 6). The comprehensive revisions in the
methodology of compilation and classification
systems referred to in the government press note Subscribe to the
have involved some radical departures that were
proposed by SNA 1993 and the latest SNA 2008 in Web Edition / Digital Archives
defining gross domestic product (GDP), which has
now been adopted by the Government of India.
This radical departure indicated above,
takes three forms:
(i) The concept of gross value added (GVA) at
factor cost is not a concept to be explicitly used
in the SNA; it is a measure of income and not
output with observable sector of prices;
(ii) GDP at market prices is the GDP in SNA, as
transactions are valued at the actual price agreed
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Though these recommendations were made
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The concept of GVA at basic prices was intro- Postal address: Economic and Political Weekly,
duced by the SNA 1993 and carried forward in 320-321, A to Z Industrial Estate, GK Marg, Lower Parel, Mumbai 400 013, India.
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Economic & Political Weekly EPW FEBRUARY 14, 2015 vol l no 7 77

ECONOMIC NOTES EPW Research Foundation
distinction made in the SNA between GDP and and SNA 2008:104). But, both SNA 1993 and SNA resources, took the initiative of producing a
value added appears to be just hair-splitting. 2008 recognise that GVA at factor cost can be vast array of national level statistics. One of its
A close study of SNA 2008 suggests that the derived from GVA at basic prices by subtracting coveted initiatives was the generation of basic
above assertion on GDP at market prices is not other taxes on production, less subsidies on data on the private corporate sector based on a
an unequivocal statement. In explaining the production. When there is a clear-cut method of system of sample studies. Though the govern-
concept, SNA 2008 makes a clear distinction deriving GDP at factor cost, there is no justifiable ment has achieved considerable advancement
between a situation with VAT and that without reason to exclude the concept from the SNA, as in producing firm national accounts statistics
VAT. It argues thus: “The traditional concept of has been argued in identical terms in both SNAs. over the years, it has continued to depend on
‘market’ price becomes somewhat blurred Apart from the fact that it is a value added the RBI for corporate sector data. With the
under a system of VAT or similar deductible concept, and useful for economic analysis, and explosive growth of private sector companies,
taxes because there may be two different prices to ascertain the distribution of incomes RBI’s sample studies have become unrepre-
for a single transaction: one from the seller’s amongst the factors of production, there are a sentative of the corporate sector as a whole. As
point of view and another from the purchaser’s, few other strong reasons why GDP at factor cost brought out by the High-Level Committee on
depending upon whether or not the tax is should be held out as one of the primary meas- Estimation of Saving and Investment (MOSPI
deductible’’ (SNA 2008: 103). It then recom- ures in the SNA. First, as a value added concept, 2009: Chaired by C Rangarajan), there have
mends that in the SNA the term “market prices” GDP can be derived in three different ways as been serious drawbacks in the results of the RBI
should be avoided. recognised by all the SNAs: (i) by production sample studies based on paid-up capital as the
In micro accounts, GVA is equivalent to out- method; (ii) by expenditure method; and blowing up factor, particularly in regard to cor-
put valued at producers’ prices less intermedi- (iii) by income method. The aggregates derived porate savings and investment. The committee
ate consumption valued at purchasers’ prices. by the three methods become very relevant for had strongly urged the government to firm up
Thus, in the presence of VAT, the producers’ the SNA. Second, SNAs conclude that GVA at fac- the data flowing from the Ministry of Corporate
price would exclude invoiced VAT, and hence “it tor cost can be derived by a circuitous method Affairs’ online data reporting for companies
would be inappropriate to describe this meas- of deducting from GVA at basic prices, the indi- under their e-governance initiative (MCA21). It
ure as being at market prices” (SNA 2008:104). rect taxes on production (net of their subsidies). is now reported that the government has
On the other hand, in the absence of VAT, total But, many systems of national accounts, like succeeded in achieving this goal.
value of intermediate inputs consumed is the India’s, derive rather directly, the gross pri- It appears that there has been an all-round
same whether they are valued at producers’ or mary incomes first as summation of compensa- improvement in data on corporate sector sav-
purchasers’ prices, in which case the measure tion for employees (CE), operating surplus and ings and investment. As shown in the main
of GVA is the same as the one that uses produc- mixed income (OS/MI), and then add produc- article, there was about a 40% improvement in
ers’ prices, to value both inputs and outputs. tion taxes less production subsidies to estimate corporate sector savings in the revised series as
The SNA (2008: 104) asserts thus: “It is an eco- GVA at basic prices. Finally, the entire SNA liter- compared with the data from the existing
nomically meaningful measure that is equiva- ature accepts GDP as a value added concept and series for 2012–13. Likewise, corporate invest-
lent to the traditional measure of gross value no economic logic would allow indirect taxes to ment has shown a 45% rise for the same year.
added at market prices”. be part of value addition. Correspondingly, based on the conventional
It must be recognised that netting of VAT on residual method, the household savings in the
intermediate inputs is at the micro or individual- MCA 21 form of physical assets has shown an absolute
transaction level. At the aggregate level for the This has been a long-standing issue concern- decline of about 16.0%.
system as a whole, VAT on inputs is not entirely ing, particularly, the estimates of corporate It must be clarified here that the above
foregone by the government. It is just that the saving and investment. Initially, when the gov- unqualified approval of data improvement
double taxation of inputs is avoided by the net- ernment statistical system had not developed, relates to only saving and investment and not
ting process; it is once collected at some initial the Reserve Bank of India (RBI) with its vast necessarily of the new data on value added.
stage. Studies have shown that in all countries
including India (RBI 2008), introduction of VAT
has resulted in better tax buoyancy. Therefore,
whether there is VAT or not, the collection of indi-
rect taxes adds to the producers’ prices and
hence the traditional measure of GDP at market
EPW 5-Year CD-ROM 2004-08 on a Single Disk
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By bringing the concept of GVA at basic prices to browsing experience productive. The contents of the CD-ROM are organised as in the print edition, with
the forefront, the government’s new methodol- articles laid out in individual sections in each issue.
ogy has relegated to the background yet
another traditional concept, namely, GDP at With its easy-to-use features, the CD-ROM will be a convenient resource for social scientists, researchers
factor cost. It has great economic meaning. and executives in government and non-government organisations, social and political activists, students,
Admittedly, it is a measure of income and not corporate and public sector executives and journalists.
output (SNA 1968: 154). It is a measure of GVA Price for 5 year CD-ROM (in INDIA)
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78 FEBRUARY 14, 2015 vol l no 7 EPW Economic & Political Weekly