Base year for GDP changed; GDP grew at 6.9% in FY14

Tribune News Service

New Delhi, January 30

The government has revised the base year for calculation of national accounts, which has in turn led to a revision in the economic growth rate for 2013-14 to 6.9% while earlier estimate on the basis of old series was 4.7%.

According to analysts, the revision of the base year is likely to make it easier for the government to meet its fiscal deficit target.

Similarly, the economic growth rate for 2012-13 has been revised upwards to 5.1%, compared with 4.5% estimated earlier.

These changes follow a revision in the base for calculating national accounts to 2011-12 from 2004-05. The base year was last revised in January 2010.

“Real GDP or GDP at constant (2011-12) prices stands at Rs 92.8 lakh crore and Rs 99.2 lakh crore, respectively, for the years 2012-13 and 2013-14, showing growth of 5.1% during 2012-13, and 6.9% during 2013-14,” said a government statement.

India Ratings in an earlier report had said a base year change is a regular and methodological issue.

According to India Ratings, the FY14 fiscal deficit and current account deficit are likely to decline to 4.3% of GDP (4.6% earlier) and 1.6% of GDP (1.7% earlier), respectively. The agency further expects the Indian economy to become a three trillion dollar economy by FY20 with the change in base to FY12. On FY05 base, this would have happened a year later that is in FY21.

In case of base year revisions, apart from a shift in the reference year for measuring the real growth, conceptual changes, as recommended by the international guidelines, are incorporated. Further, statistical changes like revisions in the methodology of compilation, adoption of latest classification systems, and, inclusion of new and recent data sources are also made. Changes are also made in the presentation of estimates to improve ease of understanding for analysis and facilitate international comparability.

As per data released today, India’s fiscal deficit overshot the budget estimate of Rs 5.31 lakh crore by December-end and may lead to more measures in the remaining part of 2014-15 to restrict it to 4.1% of the GDP.