GDP base revision to take hit as Household Consumer Expenditure Survey gets delayed

Covid has thrown a wrench into India’s plan to move to the chain base method to estimate GDP.

Agencies
India’s GDP fell to an 11-year low in FY20 at 4.2%, the lowest since FY09 when GDP was 3.1%.
NEW DELHI: The Covid-19 pandemic has derailed India’s plans of transitioning to a more robust system of estimating economic growth. A key survey that measures spends by households and serves as the foundation for gross domestic product (GDP) estimates has got delayed with the inability of official surveyors to step out in field to collect data and many parts of the country turning into containment zones.

“We are not sending enumerators out as yet. We plan an exercise to test the survey instrument and will go for a pilot once the situation improves because there are many containment zones,” said an official.

The ministry of statistics and programme implementation (MoSPI) had plans to shift to chain base method to estimate GDP from the current practice of a fixed base year but the Household Consumer Expenditure survey, which is used to rebase macroeconomic indicators, has been delayed. In the chain base method, the base year is not fixed. The chain base method will capture structural changes in the economy faster by allowing new activity and items to be added every year. Current GDP estimates are based on data for 2011-12 and are due for an update.


A pilot survey was planned this year ahead of the proposed full-scale surveys in 2020-21and 2021-22. However, the plan is derailed as many parts of the country are containment zones, making it difficult to ascertain a sample for the survey.

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Only a survey frame or the population of interest from which a sample would be drawn, can be determined now. The frame is unlikely before July and a pilot survey would be much later in the year, thereby delaying the actual surveys and hence, the chain-based GDP.

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India’s GDP fell to an 11-year low in FY20 at 4.2%, the lowest since FY09 when GDP was 3.1%.

The statistics office had last year junked the idea of shifting to 2017-18 as the base year because it was not considered a normal year due to the impact of demonetisation and roll out of Goods and Services Tax.

The Advisory Committee on National Accounts Statistics had asked MoSPI to consider 2020-21 as the next base year of National Accounts in view of the structural reforms in the economy.

“We will decide where to do the pilot once states give us an idea about the containment zones,” the official added.

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The government had shelved the previous Household Consumer Expenditure report, a leaked draft of which showed a decline in spending in rural India in FY18. The findings of the report are used to rebase GDP and other indicators.
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