IMF Gives ‘C’ Grade for India’s National Accounts Statistics
Kartavya Desk Staff
Source: DC
Subject: Economy
Context: The IMF’s latest Article IV review has given India’s national accounts statistics a ‘C’ grade, citing methodological weaknesses.
• Regarding India’s main inflation measure, the Consumer Price Index, the IMF graded India a ‘B’, which means the data provided “have some shortcomings but are broadly adequate for surveillance”.
About IMF Gives ‘C’ Grade for India’s National Accounts Statistics:
• What the Grade Means? A ‘C’ grade indicates that while data is available regularly, methodological shortcomings hamper effective economic surveillance and cross-country comparability.
• A ‘C’ grade indicates that while data is available regularly, methodological shortcomings hamper effective economic surveillance and cross-country comparability.
• Reasons Stated by IMF: Outdated Base Year (2011–12): GDP and CPI rely on an old consumption and production structure that no longer reflects the modern economy. Use of WPI as Deflators: Lack of a full Producer Price Index (PPI) forces reliance on wholesale prices, weakening real GDP estimation. Production vs Expenditure Gaps: Large and recurring discrepancies suggest under coverage of expenditure data and informal sector activity. Limited Seasonal Adjustment: Quarterly GDP lacks robust seasonal adjustment, affecting interpretation of growth trends. Need for Better Statistical Techniques: IMF points to scope for improved modelling practices in national accounts.
• Outdated Base Year (2011–12): GDP and CPI rely on an old consumption and production structure that no longer reflects the modern economy.
• Use of WPI as Deflators: Lack of a full Producer Price Index (PPI) forces reliance on wholesale prices, weakening real GDP estimation.
• Production vs Expenditure Gaps: Large and recurring discrepancies suggest under coverage of expenditure data and informal sector activity.
• Limited Seasonal Adjustment: Quarterly GDP lacks robust seasonal adjustment, affecting interpretation of growth trends.
• Need for Better Statistical Techniques: IMF points to scope for improved modelling practices in national accounts.
About India’s National Accounts Statistics (NAS):
• What It Is? A comprehensive macroeconomic database published by MoSPI that provides GDP, GVA, consumption, savings, investment and related aggregates at current and constant prices.
• A comprehensive macroeconomic database published by MoSPI that provides GDP, GVA, consumption, savings, investment and related aggregates at current and constant prices.
• Methodology Used: UN System of National Accounts (SNA-2008): India follows globally accepted standards for compiling macroeconomic aggregates. Income Approach (Primary): GDP estimated using incomes earned by households, enterprises and government. Expenditure Approach (Supplementary): Estimates GDP based on consumption, investment, government spending and net exports. Sectoral GVA Method: Computes value added across agriculture, industry and services at current and constant (2011–12) prices.
• UN System of National Accounts (SNA-2008): India follows globally accepted standards for compiling macroeconomic aggregates.
• Income Approach (Primary): GDP estimated using incomes earned by households, enterprises and government.
• Expenditure Approach (Supplementary): Estimates GDP based on consumption, investment, government spending and net exports.
• Sectoral GVA Method: Computes value added across agriculture, industry and services at current and constant (2011–12) prices.
• Key Indicators Published: GDP & GVA—sector-wise and aggregate. Consumption Expenditure—private and government. Gross Capital Formation (GCF)—machinery, construction, valuables. Savings & Investment Rates across sectors. National Income, Disposable Income & Per-Capita Indicators.
• GDP & GVA—sector-wise and aggregate.
• Consumption Expenditure—private and government.
• Gross Capital Formation (GCF)—machinery, construction, valuables.
• Savings & Investment Rates across sectors.
• National Income, Disposable Income & Per-Capita Indicators.