Sample Answer
Introduction
In 2015, the Central Statistical Office (CSO) made changes to computing methodology of GDP based upon recommendations of K Sundaram Committee. This has brought India’s methodology in line with international standards of System of National Accounting 2008.
Body
Important Changes:
- Change in the base year from 2004-2005 to 2011-2012.
- Change in Default GDP from the GDP at Factor Cost to GDP at Market Prices.
Change in GDP methodology
- Sector wise estimates using GVA at Basic Prices i.e., GDP at Factor Cost + Production Taxes – Production Subsidies.
- Calculation of GDP: GVA at basic prices + Product Taxes – Product subsidies.
- Change in database from Annual Survey of Industries (ASI) to MCA-21 database of Ministry of Corporate affairs
- Improved coverage of financial corporations through information provided by SEBI, PFRDA, IRDA etc.
- Some economists have highlighted that these changes have inflated GDP numbers by around 2.5% on account of – Change in default GDP, Presence of shell firms(38%) in MCA database etc. However, Eco Survey 2018-19 has highlighted that these concerns are unfounded.
Conclusion
The credibility of the economy depends upon ability to come out with fool-proof and indisputable GDP estimates. Hence, recommendations of the Pronab Sen committee should be taken into consideration in the future.
