The government will soon put in the public domain the national accounting methods in an attempt to lift confidence in the official numbers. The government had to revise its demand-side estimates of gross domestic product, or GDP, for the first quarter of 2010-11 after the initial estimates showed a wide variation from the supply-side numbers. A day after announcing a 3. 7% rise in expenditure on GDP, or demand-side of GDP, the government revised it to 10%, closer to the 8% expansion in the supplyside GDP, the more widely watched measure of national income. The methodology, which the ministry of statistics and plan implementation says was in accordance with international standards, would now be put out in the public allowing experts to get an idea of the way the official data is compiled. The methodology has been finalized and accepted by the National Accounts Division (NAD), and we would be putting out the full document soon, said a senior government official from the ministry of statistics. Transparency in statistics is always a welcome step, said Abheek Barua, chief economist, HDFC Bank. He also added that it was an important step as it would give more clarity on how the services sectors contribution was being measured, especially for the IT and banking services. The methodology document would clearly explain how the quarterly and yearly GDP estimates are calculated. There is a difference in the way the quarterly and yearly growth numbers for the GDP are calculated. The quarterly numbers of national accounts are more indicator based, involving some amount of extrapolation or projections of values based on previously known information. The quarterly numbers are also revised throughout the year when new information becomes available. The final yearly growth rate is only put out after a gap of 11 months into the next year, which are known as the revised estimates. GDP growth for 2009-10 was revised to 8% against initial estimates of 7. 4%. Central Statistics Office (CSO), the nodal agency for compiling data on GDP, has put in place a protocol to ensure that data goes through a number of checks before it is released.
The department of industrial policy and promotion puts out index values of the 209 items used for the compilation of the Index for Industrial Production, or IIP. Economists feel that the source and quality of data is also equally important. How the data flows, the source of the data is much more crucial for the whole process, said Indranil Pan, chief economist, Kotak Mahindra Bank. – www.economictimes.indiatimes.com
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