Question

Q. Which of the following statements is/are not correct regarding the new method of GDP estimation followed in India?

Select the correct answer using the code given below:

• A. 1 and 2 only
• B. 1 and 3 only
• C. 3 only
• D. 1, 2 and 3

Answer 1

The correct option is C 3 only

Explanation:

Features of the method of GDP calculation followed today.

• In January 2015, the government moved to a new base year of 2011-12 from the earlier base year of 2004-05 for national accounts. The base year of national accounts had been revised earlier in January 2010.
• In the new series, the Central Statistics Office (CSO) did away with Gross Domestic Product (GDP) at factor cost and adopted the international practice of valuing industry-wise estimates as gross value added (GVA) at basic prices.
• The Present rebasing has been done by CSO taking into consideration the recommendations given by the SNA (System of National Accounts) published by the UN in 2008.
• IIP had been used to track manufacturing and commerce activity in the old system. The volume changes were accounted for, but not the value changes. We use the concept of GVA – Gross Value Added – in the newer methodology, which measures the value-added to the economy.
• GDP was first computed using IIP data and then updated using ASI (Annual Survey of Industries) data in the old methodology. Only those businesses that were registered under the Factories Act were included in ASI. Data from MCA 21 is used in the newer system (MCA 21 is a Ministry of Corporate Affairs e-governance programme that was introduced in 2006 and allows firms/companies to electronically file their financial reports). Data from over 5,00,000 businesses is collected under this programme.)
• Farm produce was used as a proxy for calculating agricultural income in the previous system. The scope for calculating value addition in the agriculture industry has been expanded, thanks to the new technique.
• In the previous system, only a few mutual funds and non-banking financial companies (NBFCs) were considered for financial transactions. Stockbrokers, asset management companies, pension funds, stock exchanges, and other entities have been added to the new methodology's scope.
• Trading income data from the NSSO's 1999 establishment survey was compared to this new series using the 2011-12 survey under the previous system.