​Data deficiencies, Pg6

Key Highlights:

• The IMF gave India's national accounts statistics a 'C' grade, the second-lowest, indicating issues that hinder economic surveillance.
• The IMF has repeatedly pointed out that India's base year of 2011-12 for national accounts is outdated.
• India is updating the base years and methodologies for national accounts, CPI, and IIP, with a new series expected in early 2026.
• Accurately capturing the informal sector is a major challenge for India's national accounts statistics.

Detailed Insights:

• A 'C' grade for national accounts places India in a similar position to China, which is undesirable given India's robust data collection infrastructure.
• Issues with national accounts metrics, including GDP, GVA, sectoral metrics, investment, consumer spending, and exports, impede effective policymaking.
• The outdated base year of 2011-12 for the Index of Industrial Production (IIP) and Consumer Price Index (CPI) also affects the accuracy of price movement capture.
• The RBI's monetary policy is impaired due to the outdated base year and the excessive weighting of food in the CPI.
• The inclusion of GST data in GDP estimation in the upcoming series is a positive step towards improving national accounts.
• A more accurate estimate of the informal sector will significantly impact the growth rate and size of the economy and provide insights into the well-being of most Indians.

Key Concepts Involved:

• GDP (Gross Domestic Product): The total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.
• GVA (Gross Value Added): A measure of the total value of goods and services produced in an economy, less the value of intermediate consumption used in production.
• CPI (Consumer Price Index): A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.
• IIP (Index of Industrial Production): An index that shows the growth rates in various industry groups of the economy in a stipulated period.