Model Question and Answers for APSC | Explain the difference between computing methodology of India’s Gross Domestic Product (GDP) before the year 2015 and after the year 2015. (GS 3 MAINS 2021)
Ans : GDP is a measure primarily used as a yardstick to gauge the growth of a country. Gross Domestic Product or GDP is the total of the output of a country. In 2015, a new series was announced to calculate the GDP by upgrading the methodology with new data sources to meet UN standards.
The difference between computing methodology of India’s Gross Domestic Product (GDP) before the year 2015 and after the year 2015
1. Change of base year from 2004-2005 to 2011-2012
2. Replacing Factor Cost with Market Prices: India will measure GDP by the gross value added (GVA) method – a way of calculating GDP at basic prices instead of at factor cost.
3. The industry-wise estimates will be presented as gross value added (GVA) at basic prices while GDP at market prices will be referred to simply as GDP
4. Broadening of database: Previous data was sampled from Annual Survey of Industries (ASI), which comprised about two lakh factories. But the new database draws data from the Ministry of Corporate Affairs (MCA21) where more than five lakh odd companies registered. In simple terms while the earlier data gave only a factory-level picture, the new data looks at the enterprise level.
5. Also, the new database is much more comprehensive covering financial institutions and regulatory bodies’ like- SEBI, PFRDA, and IRDA. Local organisations and institutions are well represented in this series.
6. The new method is statistically more robust since it estimates more indicators such as consumption, employment, and the performance of enterprises, and incorporates factors that are more responsive to current changes.
7. Earlier data only included value added in farm produce but the new data includes value addition in Livestock as well.