System of National Accounts 2025
Kartavya Desk Staff
Syllabus: Economics
Source: LM
Context: The United Nations Statistical Commission has adopted the System of National Accounts 2025 (SNA 2025), a revised global framework for measuring economies. It integrates concerns of inequality, environment, and unpaid work into national accounts, going beyond GDP.
About System of National Accounts 2025:
What it is?
• A comprehensive international framework for compiling national accounts, replacing the earlier SNA 2008.
• Moves beyond GDP to capture sustainability, distribution, and non-market activities.
Key Features:
• Natural Capital Accounting: Depletion of minerals, coal, oil, and gas treated as production cost; renewables like solar, wind, hydro recognised as assets.
• Distributional Accounts: Income, wealth, consumption, and savings shown by household groups to highlight inequality.
• Unpaid Work Inclusion: Household and care work included in extended accounts to recognise women’s contribution.
• Broader Policy Relevance: Links national growth with fairness, ecological balance, and inclusiveness.
India’s Preparedness:
• Green National Accounts & EnviStats: India has already started publishing annual EnviStats reports (since 2018), tracking forests, water, minerals, and energy as recommended by the Dasgupta Committee (2013).
• Time Use Surveys (2019, 2024): These surveys provide evidence of unpaid household and care work, crucial for integrating women’s invisible labour into national accounts.
• PLFS, AIDIS, Consumption Surveys: Together, these databases capture employment, household earnings, wealth distribution, and consumption patterns that can be aligned with SNA 2025’s distributional accounts.
• Base Revision Exercise: The ongoing revision of India’s National Accounts offers a timely chance to integrate natural resource depletion, inequality, and unpaid work into the GDP framework.
Opportunities:
• Sustainable resource use: Accounting for depletion strengthens the case for using mining royalties and resource revenues to build sustainability or future generation funds.
• Renewable energy as wealth: Recognising solar, wind, and hydro as assets redefines clean energy not only as climate action but also as economic capital.
• Gender-sensitive data: Inclusion of unpaid work helps policymakers design labour and social policies that better reflect women’s contribution to the economy.
• Targeted welfare: Linking inequality analysis with national accounts allows governments to identify “who benefits from growth” and design sharper welfare schemes.
Challenges Ahead:
• Data integration: Combining survey micro-data (PLFS, NSS, consumption) with national aggregates is complex but essential for accuracy.
• Institutional capacity: Statistical divisions at the Centre and states need training, tools, and manpower to adopt green and distributional accounting.
• Political resistance: Resource-rich states may object if their reported GSDP falls once natural resource depletion is counted as a cost.
• Communication gap: Despite innovations, India’s statistical progress is poorly communicated, leading to outdated criticism in public debates.
Way Forward:
• Roadmap for base revision: A clear timeline and methodology should be drawn to fully adopt SNA 2025 in India’s next GDP base revision.
• Build state capacity: Resource and training support must be given to states for preparing natural capital and distributional accounts.
• Institutionalise new data: Regularly include time-use, unpaid care work, and household inequality statistics into national accounts.
• Communicate innovations: Proactive outreach and publications are needed to highlight India’s advances in global statistical practices.
Conclusion
SNA 2025 marks a shift from GDP-centric measurement to sustainability and inclusiveness. India, with its groundwork in green accounts and social surveys, is well-placed to adapt. As we march toward Viksit Bharat 2047, adopting SNA 2025 ensures that our growth story is not just about economic size but also about equity, environment, and dignity for all.