RBI May 1998 Bulletin - Quick Estimates of National Income, 1996-97 and Advance Estimates, 1997-98: A Review - ربی - Reserve Bank of India
RBI May 1998 Bulletin - Quick Estimates of National Income, 1996-97 and Advance Estimates, 1997-98: A Review
In February 1998, the Central Statistical Organisation (CSO) has released Provisional Estimates for 1995-96, Quick Estimates for 1996-97 and Advance Estimates for 1997-98. A brief review of these estimates is attempted here. 1. Real Gross Domestic Product (GDP) and its Sectoral Composition 1.1 Review of the Estimates (a) Quick Estimates, 1996-97 According to the Quick Estimates, Gross Domestic Product (GDP) at factor cost (at 1980-81 prices) in 1996-97 had shown an increase of 7.5 per cent over the year, which was higher than that in 1995-96 (7.2 per cent) (Table 1 and Statement 1). The higher growth rate in 1996-97 was due to an accelerated growth rate in 'agriculture and allied activities', which had more than compensated the decelerations in 'industry' and 'services'. Real national income (i.e., NNP at factor cost) had also registered a higher growth rate of 7.7 per cent in 1996-97 as against 7.3 per cent in 1995-96. Similarly, per capita income recorded a growth of 5.9 per cent as compared to 5.5 per cent, during the same years.
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(Per Cent) | ||||||
Sector | Growth Rate | Sectoral Shares | ||||
---|---|---|---|---|---|---|
1995-96 (Provisional Estimates) | 1996-97 (Quick Estimates) | 1997-98 (Advance Estimates) | 1995-96 (Provisional Estimates) | 1996-97 (Quick Estimates) | 1997-98 (Advance Estimates) | |
(1) | (2) | (3) | (4) | (5) | (6) | (7) |
Agriculture and Allied Activities | (-) 3.0 | 7.9 | (-) 2.0 | 26.0 | 26.1 | 24.4 |
Industry (excluding Construction) | 12.9 | 6.6 | 6.1 | 27.0 | 26.8 | 27.0 |
Services (including Construction) | 10.3 | 7.8 | 8.3 | 47.0 | 47.1 | 48.6 |
Gross Domestic Product | 7.2 | 7.5 | 5.0 | 100.0 | 100.0 | 100.0 |
* Prepared in the Division of National Income, Saving & Flow of Funds in the Department of Economic Analysis and Policy. |
A sector-wise analysis of the growth in real GDP for 1996-97 brings out the following features (Statement 2).
(b) Advance Estimates, 1997-98 The growth rate of real GDP is estimated to decelerate from 7.5 per cent in 1996-97 to 5.0 per cent in 1997-98, primarily on account of a negative growth of GDP originating from 'agriculture and allied activities' (from 7.9 per cent to (-) 2.0 per cent). Other sectors, which have experienced deceleration in their growth rates in 1997-98 are the following:
On the whole, in 1997-98, the shares of 'industry' and 'services' in GDP have moved up, respectively, to 27.0 per cent and 48.6 per cent, along with a decline in the share of 'agriculture and allied activities' to 24.4 per cent. Other real national and domestic product aggregates have also suffered decelerations in their growth rates in 1997-98 (Statement 1). The real National Income is estimated to show a lower growth of 4.9 per cent. Per capita real national income is placed at Rs. 2,847, with a lower growth of 3.1 per cent. 2. Saving and Capital Formation 2.1 Aggregate Saving and Capital formation There was a significant step-up in the rate of Gross Domestic Saving (GDS) from 25.3 per cent of GDP at current market prices in 1995-96 to 26.1 per cent in 1996-97 (Table 2 and Statement 5). Gross Domestic Capital Formation (GDCF, which is adjusted for errors and omissions), registered a marginal increase from 27.1 per cent of GDP in 1995-96 to 27.3 per cent in 1996-97. Thus, the gap in saving-GDCF further narrowed due to a decline in the rate of net inflow of resources from abroad. Incidentally, Gross Capital Formation (GCF, which is unadjusted for errors and omissions) declined substantially from 27.3 per cent of GDP in 1995-96 to 25.2 per cent of GDP in 1996-97. This was due to 'errors and omissions', which had changed from (-) Rs.1,197crore (or (-)0.1 per cent) in 1995-96 to (+) Rs. 26,637 crore (or 2.1 per cent) in 1996-97.
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Item | 1995-96 (Provisional Estimates) | 1996-97 (Quick Estimates) | 1997-98 (Advance Estimates) | |||
---|---|---|---|---|---|---|
Amount (Rs. crore) | Growth Rates (Per Cent) | Amount (Rs. crore) | Growth Rates (Per Cent) | Amount (Rs. crore) | Growth Rates (Per Cent) | |
I. Output | ||||||
1. GDP at factor cost (1980-81 prices) | 2,76,132 | 7.2 | 2,96,845 | 7.5 | 3,11,828 | 5.0 |
2. GDP at factor cost (current prices) | 10,06,286 | 15.9 | 11,49,215 | 14.2 | n.a | n.a |
3. GDP at current market prices | 11,18,964 | 16.1 | 12,76,974 | 14.1 | n.a | n.a |
4. NDP at factor cost (1980-81 prices) | 2,45,104 | 7.0 | 2,63,427 | 7.5 | 2,75,836 | 4.7 |
5. NDP at current market prices | 10,07,378 | 16.0 | 11,49,792 | 14.1 | n.a | n.a |
6. NNP at factor cost (1980-81 prices) | 2,39,957 | 7.3 | 2,58,465 | 7.7 | 2,71,052 | 4.9 |
7. NNP at factor cost (current prices) | 8,81,216 | 16.0 | 10,08,188 | 14.4 | n.a | n.a |
8. NNP at market prices ( 1980-81 prices ) | 2,73,742 | 7.6 | 2,94,341 | 7.5 | n.a | n.a |
9. NNP at current market prices | 9,93,894 | 16.2 | 11,35,947 | 14.3 | n.a | n.a |
10. GNP at factor cost (1980-81 prices) | 2,70,985 | 7.4 | 2,91,883 | 7.7 | 3,07,044 | 5.2 |
11. GNP at factor cost (current prices) | 9,92,802 | 16.1 | 11,35,370 | 14.4 | n.a | n.a |
12. Per capita National Income (In Rupees) | ||||||
12.1 at current prices | 9,578 | 14.0 | 10,771 | 12.5 | n.a | n.a |
12.2 at 1980-81 prices | 2,608 | 5.5 | 2,761 | 5.9 | 2,847 | 3.1 |
II. Consumption Expenditure (at current prices) | ||||||
1. Private Final Consumption Expenditure | 6,49,094 | 12.8 | 7,34,866 | 13.2 | n.a | n.a |
(58.0) | (57.5) | |||||
2. Government Final Consumption Expenditure | 1,15,957 | 15.4 | 1,32,166 | 14.0 | n.a | n.a |
(10.4) | (10.3) | |||||
III. Saving and Investment (at current prices) | ||||||
1. Gross Domestic Saving ( GDS ) | 2,83,003 | 14.5 | 3,33,816 | 18.0 | n.a | n.a |
(25.3) | (26.1) | |||||
2. Gross Domestic Capital Formation (GDCF) | 3,03,783 | 17.3 | 3,48,485 | 14.7 | n.a | n.a |
(27.1) | (27.3) | |||||
Note: Figures in brackets are percentages of Gross Domestic Product (GDP) at current market prices. Source: Central Statistical Organisation. |
Item | 1995-96 (Provisional Estimates) | 1996-97 (Quick Estimates) | 1997-98 (Advance Estimates) | |||
---|---|---|---|---|---|---|
Amount (Rs. crore) | Growth Rates (Per Cent) | Amount (Rs. crore) | Growth Rates (Per Cent) | Amount (Rs. crore) | Growth Rates (Per Cent) | |
1. Agriculture and Allied Activities | 71,907 | -3.0 | 77,564 | 7.9 | 76,011 | -2.0 |
(26.0) | (26.1) | (24.4) | ||||
1.1 Agriculture | 66,863 | -3.4 | 72,362 | 8.2 | n.a | n.a |
(24.2) | (24.4) | |||||
2. Industry | 74,471 | 12.9 | 79,389 | 6.6 | 84,271 | 6.1 |
(27.0) | (26.8) | (27.0) | ||||
2.1 Manufacturing | 62,207 | 14.0 | 66,785 | 7.4 | 70,863 | 6.1 |
(22.5) | (22.5) | (22.7) | ||||
2.2 Mining & Quarrying | 5,151 | 8.4 | 5,138 | -0.3 | 5,463 | 6.3 |
(1.9) | (1.7) | (1.8) | ||||
2.3 Electricity, Gas & Water Supply | 7,113 | 7.3 | 7,466 | 5.0 | 7,945 | 6.4 |
(2.6) | (2.5) | (2.5) | ||||
3. Services | 1,29,754 | 10.3 | 1,39,892 | 7.8 | 1,51,546 | 8.3 |
(47.0) | (47.1) | (48.6) | ||||
3.1. Construction | 12,216 | 9.7 | 12,851 | 5.2 | 13,261 | 3.2 |
(4.4) | (4.3) | (4.3) | ||||
3.2 Trade, Hotels and Restaurants | 39,968 | 15.4 | 43,313 | 8.4 | 63,526 | 5.9 |
(14.5) | (14.6) | (20.4) | ||||
3.3 Transport , Storage and Communication | 15,264 | 8.3 | 16,664 | 9.2 | 63,526 | |
(5.5) | (5.6) | (20.4) | ||||
3.4 Financing, Insurance, Real Estate & Business Services | 33,152 | 9.7 | 36,045 | 8.7 | 39,456 | 9.5 |
(12.0) | (12.1) | (12.7) | ||||
3.5 Community, Social & Personal Services | 29,154 | 6.0 | 31,019 | 6.4 | 35,303 | 13.8 |
(10.6) | (10.4) | (11.3) | ||||
4. Gross Domestic Product (1+2+3) | 2,76,132 | 7.2 | 2,96,845 | 7.5 | 3,11,828 | 5.0 |
(100.0) | (100.0) | (100.0) | ||||
Note: (1) Figures in brackets are percentages of Gross Domestic Product (GDP) at factor cost. Source: Central Statistical Organisation. |
Item | 1995-96 (Provisional Estimates) | 1996-97 (Quick Estimates) | ||
---|---|---|---|---|
Amount (Rs. crore) | Growth Rates (Per Cent) | Amount (Rs. crore) | Growth Rates (Per Cent) | |
1. Agriculture and Allied Activities | 67,264 | -3.7 | 72,593 | 7.9 |
(27.4) | (27.6) | |||
1.1 Agriculture | 62,665 | -4.0 | 67,871 | 8.3 |
(25.6) | (25.8) | |||
2. Industry | 60,212 | 14.0 | 63,990 | 6.3 |
(24.6) | (24.3) | |||
2.1 Manufacturing | 53,760 | 14.6 | 57,425 | 6.8 |
(21.9) | (21.8) | |||
2.2 Mining & Quarrying | 3,031 | 10.4 | 2,968 | -2.1 |
(1.2) | (1.1) | |||
2.3 Electricity, Gas & Water Supply | 3,421 | 9.1 | 3,597 | 5.1 |
(1.4) | (1.4) | |||
3. Services | 1,17,628 | 10.6 | 1,26,844 | 7.8 |
(48.0) | (48.2) | |||
3.1. Construction | 11,416 | 9.9 | 12,006 | 5.2 |
(4.7) | (4.6) | |||
3.2. Trade, Hotels and Restaurants | 38,843 | 15.6 | 42,091 | 8.4 |
(15.8) | (16.0) | |||
3.3. Transport, Storage and Communication | 9,934 | 8.7 | 10,933 | 10.1 |
(4.1) | (4.2) | |||
3.4. Financing, Insurance, Real Estate & Business Services | 30,076 | 9.8 | 32,686 | 8.7 |
(12.3) | (12.4) | |||
3.5. Community, Social & Personal Services | 27,359 | 6.0 | 29,128 | 6.5 |
(11.2) | (11.1) | |||
4. Net Domestic Product (1+2+3) | 2,45,104 | 7.0 | 2,63,427 | 7.5 |
(100.0) | (100.0) | |||
Note: Figures in brackets are percentages of Net Domestic Product (NDP) at factor cost. Source: Central Statistical Organisation. |
Item | 1995-96 (Provisional Estimates) |
1996-97 (Quick Estimates) |
||
---|---|---|---|---|
Amount (Rs. crore) | Ratio to GDP or NDP at current market prices (Per Cent) | Amount (Rs. crore) | Ratio to GDP or NDP at current market prices (Per Cent) | |
1. Gross Domestic Saving (GDS) | 2,83,003 | 25.3 | 3,33,816 | 26.1 |
1.1 Household Sector | 2,10,417 | 18.8 | 2,59,543 | 20.3 |
1.1.1 Financial Saving | 95,715 | 8.6 | 1,36,644 | 10.7 |
1.1.2 Saving in physical assets | 1,14,702 | 10.3 | 1,22,899 | 9.6 |
1.2 Private Corporate Sector | 47,391 | 4.2 | 49,545 | 3.9 |
1.2.1 Joint-stock companies | 46,182 | 4.1 | 48,336 | 3.8 |
1.2.2 Co-operative banks & societies | 1,209 | 0.1 | 1,209 | 0.1 |
1.3 Public Sector | 25,195 | 2.3 | 24,728 | 1.9 |
1.3.1 Public authorities | -12,252 | -1.1 | -16,569 | -1.3 |
1.3.1.1 government administration | -22,774 | -2.0 | -27,498 | -2.2 |
1.3.1.2 departmental enterprises | 10,522 | 0.9 | 10,929 | 0.9 |
1.3.2 Non-departmental enterprises | 37,447 | 3.3 | 41,297 | 3.2 |
2. Less consumption of fixed capital | 1,11,586 | 10.0 | 1,27,182 | 10.0 |
2.1 Household sector | 37,464 | 3.3 | 41,733 | 3.3 |
2.2 Private corporate sector | 26,198 | 2.3 | 31,972 | 2.5 |
2.3 Public sector | 47,924 | 4.3 | 53,477 | 4.2 |
3. Net Domestic Saving (NDS) | 1,71,417 | 17.0 | 2,06,634 | 18.0 |
3.1 Household sector | 1,72,953 | 17.2 | 2,17,810 | 18.9 |
3.2 Private corporate sector | 21,193 | 2.1 | 17,573 | 1.5 |
3.3 Public sector | -22,729 | -2.3 | -28,749 | -2.5 |
Note: 1) Consumption of fixed capital (item 2) has been estimated from the value of fixed capital stock and expected age of various types of assets and differs from the provision of depreciation as per books of accounts. Alternative estimates can be derived using the latter. Source: Central Statistical Organisation. |
(as percentage of GDP at current market prices) | ||
Items | 1995-96 (Provisional Estimates) | 1996-97 (Quick Estimates) |
---|---|---|
(1) | (2) | (3) |
1. Gross Domestic Saving (1.1 + 1.2 + 1.3) | 25.3 | 26.1 |
1.1. Public Sector | 2.3 | 1.9 |
1.2. Private Corporate Sector | 4.2 | 3.9 |
1.3. Household Sector (a + b) | 18.8 | 20.3 |
a) Financial Saving | 8.6 | 10.7 |
b) Physical Saving | 10.3 | 9.6 |
2. Gross Domestic Capital Formation (3 + 4) | 27.1 | 27.3 |
3. Gross Capital Formation (3.1 + 3.2 + 3.3) | 27.3 | 25.2 |
3.1 Public Sector | 7.9 | 7.4 |
3.2 Private Corporate Sector | 9.1 | 8.2 |
3.3 Household Sector | 10.3 | 9.6 |
4. Errors and Omissions | (-) 0.1 | 2.1 |
5. Saving- Investment Gap (1-2) | (-) 1.8 | (-) 1.2 |
5.1 Public Sector (1.1 - 3.1) | (-) 5.6 | (-) 5.5 |
5.2 Private Corporate Sector (1.2 - 3.2) | (-) 4.9 | (-) 4.3 |
5.3 Household Sector (1.3 - 3.3) | 8.5 | 10.7 |
Note: Components may not add up to the totals due to rounding off. |
Item | 1995-96 (Provisional Estimates) |
1996-97 (Quick Estimates) |
||
---|---|---|---|---|
Amount (Rs. crore) | Ratio to GDP or NDP at current/constant market prices (Per Cent) | Amount (Rs. crore) | Ratio to GDP or NDP at current/constant market prices (Per Cent) | |
A. At Current Prices | ||||
1. Gross Capital Formation | 3,04,980 | 27.3 | 3,21,848 | 25.2 |
1.1 Public sector | 88,477 | 7.9 | 94,215 | 7.4 |
1.2 Private corporate sector | 1,01,801 | 9.1 | 1,04,734 | 8.2 |
1.3 Household sector | 1,14,702 | 10.3 | 1,22,899 | 9.6 |
2. Consumption of fixed capital | 1,11,586 | 10.0 | 1,27,182 | 10.0 |
2.1 Public sector | 47,924 | 4.3 | 53,477 | 4.2 |
2.2 Private corporate sector | 26,198 | 2.3 | 31,972 | 2.5 |
2.3 Household sector | 37,464 | 3.3 | 41,733 | 3.3 |
3. Net Capital Formation (1-2) | 1,93,394 | 19.2 | 1,94,666 | 16.9 |
3.1 Public sector (1.1 - 2.1) | 40,553 | 4.0 | 40,738 | 3.5 |
3.2 Private corporate sector (1.2 - 2.2) | 75,603 | 7.5 | 72,762 | 6.3 |
3.3 Household Sector ( 1.3 - 2.3 ) | 77,238 | 7.7 | 81,166 | 7.1 |
4. Errors & omissions | -1,197 | -0.1 | 26,637 | 2.1 |
5. Net capital formation adjusted for errors and omissions (3-4) | 1,92,197 | 19.1 | 2,21,303 | 19.2 |
6. Gross capital formation adjusted for errors and omissions (1-4) | 3,03,783 | 27.1 | 3,48,485 | 27.3 |
B. At 1980-81 Prices | ||||
1. Gross Capital Formation | 84,912 | 27.4 | 84,418 | 25.4 |
1.1 Public sector | 22,937 | 7.4 | 22,992 | 6.9 |
1.2 Private corporate sector | 32,419 | 10.5 | 31,765 | 9.5 |
1.3 Household sector | 29,556 | 9.5 | 29,661 | 8.9 |
2. Consumption of fixed capital | 31,028 | 10.0 | 33,418 | 10.0 |
2.1 Public sector | 13,105 | 4.2 | 13,602 | 4.1 |
2.2 Private corporate sector | 8,444 | 2.7 | 9,865 | 3.0 |
2.3 Household sector | 9,479 | 3.1 | 9,951 | 3.0 |
3. Net Capital Formation (1 - 2) | 53,884 | 19.3 | 51,000 | 17.0 |
3.1 Public sector (1.1 - 2.1) | 9,832 | 3.5 | 9,390 | 3.1 |
3.2 Private corporate sector (1.2 - 2.2) | 23,975 | 8.6 | 21,900 | 7.3 |
3.3 Household Sector ( 1.3 - 2.3 ) | 20,077 | 7.2 | 19,710 | 6.6 |
4. Errors & omissions | -328 | -0.1 | 6,907 | 2.1 |
5. Net capital formation adjusted for errors and omissions (3 - 4) | 53,556 | 19.2 | 57,907 | 19.3 |
6. Gross capital formation adjusted for errors and omissions (1 - 4) | 84,584 | 27.3 | 91,325 | 27.4 |
Note: 1) Consumption of fixed capital (item 2) has been estimated from the value of fixed capital stock and expected age of various types of assets and differs from the provision of depreciation as per books of accounts. Alternative estimates can be derived using the latter. Source: Central Statistical Organisation. |
At the risk of simplifying the definition of incremental capital output ratio (ICOR), we can calculate ICOR for a year, as the ratio of 'real investment rate' and 'growth rate of real GDP at market prices'.1 Consequent to the opposite behaviour of the two measures of investment (i.e., increase in the rate of GDCF and reduction in the rate of GCF in 1996-97), the movement in ICOR becomes quite sensitive to the choice of the measure of investment.
2.2 Sectoral Saving and Capital formation The step-up in the rate of GDS in 1996-97 is attributable only to a sharp rise in the rate of household sector savings in financial assets to 10.7 per cent of GDP from 8.6 per cent of GDP in 1995-96. The increase was primarily due to a large accretion to bank deposits. However, there was a decline in the rates of saving in all its other components, viz., household sector's physical saving, public sector saving and private corporate sector saving. Public sector saving rate had deteriorated because of large dissaving by government administrative departments. 3. Summing Up Strong performance in 'agriculture and allied activities' had compensated the decelerations in 'industry' and 'services' and enabled the real GDP growth to accelerate to 7.5 per cent in 1996-97. Rate of Gross Domestic Saving (GDS) had improved from 25.3 per cent of GDP in 1995-96 to an all time high rate of 26.1 per cent in 1996-97. The rate of gross domestic capital formation (adjusted for errors and omissions) moved up from 27.1 per cent to 27.3 per cent. The estimate of 'errors and omissions' had, however, turned 'positive', and amounted to Rs.26,637 crore. Gross capital formation (unadjusted for 'errors and omissions') had declined from 27.3 per cent of GDP in 1995-96 to 25.4 per cent in 1996-97. Advance Estimates for 1997-98 predicted a lower growth rate of 5 per cent primarily on account of a negative growth in value added from 'agriculture and allied activities' (7.9 per cent in 1996-97 to (-)2.0 per cent in 1997-98).
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