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India’s FY15 GDP estimated to soar 7.4% under new methodology

The government, on Monday, estimated India’s gross domestic product (GDP) to grow 7.4% for 2014-15, compared with earlier forecasts of 5.5-6%, on back of the switch of base year from 2004-05 to 2011-12, and the new Gross Value Added (GVA) method of calculation.

For 2013-14, the centre had revised the GDP growth rate to 6.9% from the earlier reported 4.7%.

The Central Statistics Office today also estimated the September-December 2014 quarter GDP growth at 7.5%. Based on the new base year and the method of calculations, the April-June 2014 quarter provisional GDP growth was revised to 6.5% from 5.7% and the July-September 2014 quarter provisional GDP growth was revised to 8.2% from 5.3%.

Under the new process of calculating national accounts, the gross domestic product would include indirect taxes, technically called GDP at market prices instead of GDP at factor cost, exclusive of indirect taxes, which has been taken for calculating economic growth so far. This may put India at par with international standards but will rejig the entire figures of growth numbers calculated so far.

GDP growth as % year-on-year
2005-06 (base 2004-05) 2006-07 (base 2004-05) 2007-08
(base 2004-05)
2008-09 (base 2004-05) 2009-10 (base 2004-05) 2010-11 (base 2004-05) 2011-12 (base 2004-05) 2012-13 (base 2011-12) 2013-14 (base 2011-12) 2014-15 (base 2011-12)
9.3 9.3 9.8 3.7 8.5 10.3 6.6 5.1 6.9           7.4
Note: Growth is given on the basis of new definition of GDP; 2014-15 growth is based on advance estimates

If that is the practice adopted now and if the International Monetary Fund and the World Bank estimates turn out to be true, India will actually take over China in terms of growth in the next couple of years. India’s economy is estimated to grow by 6.5% in 2016-17 against China’s 6.3% in 2016 and both the growth rates are estimated at GDP at market prices by the Fund. The Bank projected India’s economic growth rate at 7% against China’s 6.9%.

Size of India’s economy (in Rs crore)
Base Year  2011-12 2012-13 2013-14 2014-15
2004-05 90,09,722 101,13,281 113,55,073 128,76,653*
2011-12 88,32,012 99,88,540 113,45,056 126,53,762
*Budget Estimates        

Centre’s fiscal deficit as percentage of GDP  
Base year 2011-12 2012-13 2013-14 2014-15
2004-05 5.6 4.8 4.5 4.1*
2011-12 5.8 4.9 4.5 4.2
*Budget Estimates        
Source: Ministry of statistics and programme implementation

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