gs3
150 Words10 Marks
Q.Explain the difference between computing methodology of India’s Gross Domestic Product (GDP) before the year 2015 and after the year 2015.
UPSC Mains 2021•Economy
Model Answer
View this Question In PYQ RealmIntroduction
Gross Domestic Product (GDP) represents the total market value of all finished goods and services produced within a country's borders during a specific timeframe. In 2015, the National Statistical Office (NSO) introduced a major structural revision in India's GDP estimation methodology to align it with international standards (specifically the UN System of National Accounts, SNA 2008).
Body Analysis
Key Differences in Computing Methodology
| Feature / Parameter | Pre-2015 Methodology | Post-2015 Methodology |
|---|---|---|
| Base Year | Based on the old benchmark of 2004-05. | Updated to 2011-12 to capture structural changes in the modern economy. |
| Primary Measure of Growth | GDP at Factor Cost was the primary metric used to represent economic growth. | Adopted GDP at Market Prices as the headline metric, while sector-wise growth is measured via Gross Value Added (GVA) at basic prices. |
| Manufacturing Sector Data | Relied primarily on the Index of Industrial Production (IIP) and the Annual Survey of Industries (ASI), covering about 2 lakh factories. | Shifted to the MCA-21 database from the Ministry of Corporate Affairs, covering financial accounts of over 5 lakh registered companies. |
| Treatment of Taxes & Subsidies | Excluded product taxes and subsidies from the core production cost calculations. | GDP at Market Price now incorporates product taxes and deducts product subsidies, reflecting actual market transactions. |
| Labour Input Estimation | Treated all categories of labor as equal in terms of productivity and value. | Introduced the concept of "Effective Labour Input", assigning different weights to owners, hired professionals, and helpers. |
| Agricultural Value Addition | Value addition was strictly limited to primary farm produce. | Expanded to include value addition beyond farm produce, relying heavily on updated livestock data. |
| Financial Sector Coverage | Limited coverage, restricted mainly to select mutual funds (like UTI) and RBI-compiled NBFC data. | Greatly expanded to cover stock brokers, stock exchanges, asset management firms, pension funds, and regulators (SEBI, PFRDA, IRDA). |
Conclusion
The post-2015 GDP computing methodology is statistically more robust, comprehensive, and responsive to structural shifts. By incorporating a wider database (MCA-21) and adopting global accounting standards, it provides a more accurate and internationally comparable picture of the Indian economy.
Previous QuestionDo Department-related Parliamentary Standing Committees keep the administration on its toes and inspire reverence for parliamentary control? Evaluate the working of such committees with suitable examples.
Next QuestionHow and to What Extent Would Micro-Irrigation Help Solve India’s Water Crisis?