PRESS INFORMATION BUREAU
GOVERNMENT OF INDIA

                                                           

Dated, the  31st January, 2006
                                                                 11th Magha , 1927 Saka

 PRESS NOTE

 QUICK ESTIMATES OF NATIONAL INCOME,
CONSUMPTION EXPENDITURE, SAVING AND CAPITAL FORMATION, 2004-05

        The Central Statistical Organisation (CSO), Ministry of Statistics and Programme Implementation has released the Quick estimates of national income, consumption expenditure, saving and capital formation for the financial year 2004-05. Alongwith the Quick Estimates, the CSO is also introducing the new series of national accounts statistics with base year 1999-2000, in place of the previous series with base year 1993-94. 

 A brief note on the new series of national accounts is placed at Annex.  A detailed brochure containing the changes made in the new series at sectoral level will be released by 28th February, 2006 through the Ministry’s website, www.mospi.nic.in. 

The salient features of the estimates for the year 2004-05, which are based on latest available information, are indicated below:

GROSS DOMESTIC PRODUCT AND NATIONAL INCOME

Gross domestic product (GDP) at factor cost at constant (1999-00) prices in 2004-05 is estimated at Rs. 23,93,671 crore as against Rs. 22,26,041 crore in 2003-04 registering a growth of 7.5 per cent during the year as against the growth rate of 8.5 per cent during the previous year. At current prices, GDP in 2004-05 is estimated at   Rs. 28,43,897 crore as against Rs. 25,43,396 crore in 2003-04, showing an increase of 11.8 per cent during the year.

 

At constant (1999-00) prices the national income (i.e. net national product at factor cost) in 2004-05 is estimated at Rs 21,41,776 crore as against Rs. 19,86,858 crore in 2003-04 showing a rise of 7.8 per cent during the year.  At current prices, the national income in 2004-05 is estimated at Rs. 25,31,223 crore as compared to Rs 22,68,576 crore in 2003-04, showing a rise of 11.6 per cent during the year.

The growth rate of 7.5 per cent in the GDP during 2004-05 has been achieved due to high growth in mining and quarrying (5.8 %), manufacturing (8.1%), construction (12.5 %), trade, hotels & restaurants (8.1 %), transport, storage and communication (14.8 %), financing, insurance, real estate & business services (9.2 %), and community, social and personal services (9.2 %).  However, agriculture, forestry and fishing sector registered low growth rate (0.7 %) during 2004-05.

  PER CAPITA NATIONAL INCOME

The per capita income (per capita net national product at factor cost) in real terms, i.e. at 1999-00 prices, is estimated at Rs. 19,649 for 2004-05 as against Rs. 18,517 in 2003-04, registering an increase of 6.1 per cent during the year. The per capita income at current prices is estimated at Rs. 23,222 in 2004-05 as against Rs. 21,142 for the previous year depicting a growth of  9.8 per cent.

CONSUMPTION EXPENDITURE, SAVING AND CAPITAL FORMATION 

In order to derive the GDP at market prices, the GDP at factor cost is adjusted by adding indirect taxes net of subsidies.  As various components of expenditure on gross domestic product, namely, consumption expenditure and capital formation, are normally measured at market prices, the discussion in the following paragraphs is in terms of market prices only.

 PRIVATE FINAL CONSUMPTION EXPENDITURE

Private Final Consumption Expenditure (PFCE) in the domestic market at current prices works out to Rs. 18,90,619 crore in 2004-05 as against Rs. 17,22,288 crore in 2003-04. At constant (1999-00) prices, the PFCE works out to Rs. 15,96,802 crore in 2004-05 as against Rs. 15,02,502 crore in 2003-04. The per capita PFCE in 2004-05 works out to Rs. 17,345 at current prices and Rs. 14,650 at constant (1999-00) prices as   against Rs. 16,051 and Rs. 14,003 respectively in 2003-04.

 DOMESTIC SAVING

Gross domestic saving (GDS) at current prices in 2004-05 is estimated at Rs. 9,07,416 crore as against Rs. 7,97,512 crore in 2003-04, constituting 29.1 per cent of GDP at market prices as against 28.9 per cent in the previous year.  The rise in GDS has been contributed by all sectors. In respect of the household sector, the saving in the form of financial and physical assets has gone up to Rs. 3,20,777 crore and Rs. 3,66,302 crore in 2004-05 from Rs. 3,16,444 crore and Rs. 3,32,190 crore in 2003-04, respectively. Saving of private corporate sector has gone up to Rs. 1,50,947 crore in 2004-05 from Rs. 1,20,852 crore in 2003-04.  The saving of the public sector showed an increase from 28,026 crore in 2003-04 to Rs. 69,390 crore in 2004-05.  The increase in the public sector saving is mainly due to decrease in the dissaving of public authorities from (-) Rs. 86,712 crore in 2003-04 to  (-) Rs.68,084 crore in 2004-05 and non-departmental enterprises from Rs. 1,14,738 crore in 2003-04 to Rs. 1,37,474 crore in 2004-05. The net domestic saving has correspondingly gone up from Rs. 5,40,942 crore in 2003-04 to Rs. 6,12,658 crore in 2004-05 and constitutes 21.6 per cent of net domestic product at market prices in 2003-04 and 21.7 per cent in 2004-05. 

 CAPITAL FORMATION

Gross Domestic Capital Formation at current prices has increased from Rs. 7,52,132 crore in 2003-04 to Rs. 9,39,555 crore in 2004-05 and at constant (1999-00) prices, it has increased from Rs. 6,43,480 crore in 2003-04 to Rs. 7,44,522 crore in 2004-05.  The rate of gross capital formation at current prices is 30.1 per cent in 2004-05 as against 27.2 per cent in 2003-04.  The rate of capital formation in 2004-05 was higher than the rate of saving because of net capital inflow from abroad of Rs. 32,139 crore in 2004-05. The rate of gross capital formation (sum of gross fixed capital formation and change in stocks) at constant (1999-00) prices has increased from 26.7 per cent in 2003-04 to 28.5 per cent in 2004-05. The rate of net capital formation at current prices in 2004-05 is 22.8 per cent as against 19.8 per cent in 2003-04.

Within the gross capital formation at current prices, the gross fixed capital formation amounted to Rs. 8,06,900 crore in 2004-05 as against Rs. 6,82,000 crore in 2003-04.  At current prices, the gross fixed capital formation of the public sector has increased from Rs. 1,81,029 crore in 2003-04 to Rs. 2,09,879 crore in 2004-05, that of private corporate sector from Rs.1,74,736 crore in 2003-04 to Rs.2,36,621 crore in 2004-05, and the household sector from Rs. 3,26,235 crore in 2003-04 to Rs. 3,60,400 crore in 2004-05.

The change in stocks of inventories, measured as additions to stocks increased, at current prices, from Rs. 19,146 crore in 2003-04 to Rs 42,199 crore in 2004-05. The increase is observed in public sector from (-) Rs. 801 crore in 2003-04 to Rs. 15,440 crore and private corporate sector from Rs. 13,992 crore to Rs. 20,857 crore. However, household sector has declined marginally from Rs.5,955 crore to Rs.5,902 crore.

The estimates of National Product, Consumption Expenditure, Saving and Capital Formation at aggregate and per capita levels for the years 1999-00 to 2004-05 are presented in Statement 1 and the detailed estimates at industry/item level in Statements 2 to 10.

Annex

 

NEW SERIES ON NATIONAL ACCOUNTS STATISTICS
WITH 1999-2000 AS THE BASE YEAR

 1.         For examining the     performance of the economy in real terms through the macro economic aggregates like Gross Domestic Product (GDP), national income, consumption expenditure, capital formation etc., estimates of the aggregates are prepared at the prices of selected year known as base year.  The estimates at the prevailing prices of the current year are termed as “at current prices”, while those prepared at base year prices are termed “at constant prices”.  The comparison of the estimates at constant prices, which means “in real terms”, gives the measure of real growth. The base year of the national accounts is changed periodically to take into account the structural changes which take place in the economy and to depict a true picture of the economy through macro aggregates like GDP, consumption expenditure, capital formation etc.

2.         The first official estimates of national income were prepared by the Central Statistical Organisation (CSO) with base year 1948‑49 for the estimates at constant prices.  These estimates at constant (1948‑49) prices alongwith the corresponding estimates at current prices and the accounts of the Public Authorities were published in the publication, "Estimates of National Income" in 1956.  With the gradual improvement in the availability of basic data over the years, a comprehensive review of methodology for national accounts statistics has constantly been undertaken with a view to updating the data base and shifting the base year to a more recent year.  As a result, base years of the National Accounts Statistics series have been shifted from 1948-49 to 1960-61 in August 1967, from 1960-61 to 1970-71 in January 1978, from 1970-71 to 1980-81 in February 1988, and from 1980-81 to 1993-94 in February 1999.

3.         In the past, National Accounts Statistics were revised decennially changing the base to a year, which ends with 1.  It was primarily because in the base year estimates, the information on working force has played an important role and working force estimates were obtained from the Population Census which are conducted decennially in the years ending with 1.  In this sequence, the previous series of National Accounts Statistics, should have been with the base year 1990-91.  At that time, it was observed that data on worker participation rate (WPR) was captured by the NSSO better than that through the Population Census. Accordingly, the CSO used the workforce estimates based on NSS workforce participation rates from the NSS 1993-94 (50th Round) survey results, and revised the base year of national accounts to 1993-94.

 4.         In continuation with this practice, the new series of national accounts is being released with base year 1999-2000 on 31st January, 2006 and has used the WPR data available from the Quinquennial NSS 55th round, in conjunction with population census totals. 

 5.         The new series, besides the shifting of the base year from 1993-94 to 1999-2000, incorporates improvements in terms of coverage and to the extent possible, the recommendations of the United Nations System of National Accounts, 1993 (1993 SNA). 

6.         The important latest data series that are used in the new series are the results of (i) NSS 55th round on employment and unemployment and consumer expenditure, (ii) NSS 56th round on unorganized manufacturing, (iii) NSS 57th round on services sectors, (iv) NSS 58th round on Housing Conditions, (v) All India Livestock Census, 2003, (vi) Population Census, 2001, and (vi) All India Census of Small Scale Industries, 2001-02.  The results of studies undertaken by the CSO through the Ministry of Agriculture and State Governments and other NGOs have also been used in the new series for updating the rates and ratios to estimate the production of fodder, market charges paid by the farmers, and yield rates of meat, meat products and meat by products for different categories of animals.

 7.         The improvements in terms of coverage have been mainly the inclusion of production of salt through seawater evaporation, and production of betel leaf, toddy, goat, buffalo and camel milk, duck eggs, and meat production from unregistered slaughtering in the States where these items are presently not covered in the production estimates. Further, expenditures made on few tree crops during the gestation period and setting up of wind energy systems are included in the estimates of output of construction sector.  A new category of ‘valuables’, which covers the expenditures made on acquisition of valuables, has been included in the gross capital formation, in line with the recommendations of 1993 SNA.

8.         Besides these, economic activities of other communication, renting of machinery and other equipment without operator, computer related activities in unorganized segment, coaching centres, social work with accommodation, recreation and cultural and supporting activities, have been taken into account as per the latest available data from the NSS 55th and NSS 57th rounds.  These activities were not adequately captured in the earlier series. 

 9.         The important procedural changes made in the new series are (i) using the production data provided by the National Horticulture Board (NHB) for all horticultural crops (with the exception of those covered under principal crops) and using the price data provided by the State Directorates of Economics and Statistics (State DESs) for all crops; (ii) introduction of a new basic material, ‘fixtures and fittings’ in the construction sector in addition to the existing 4 basic materials for estimating the value of output of construction sector; (iii) netting the retained reserves and dividends paid from the property income of mutual funds, for the purpose of estimating the output of banking sector; (iv) aligning the estimates of capital formation by industry with the estimates of capital formation by institutions, namely, public and private; (v) adjusting for reinvested earnings in India of foreign companies in the estimates of saving of private corporate sector and the consequential changes in the external transactions account (vi) including in the gross fixed capital formation of the private corporate sector, the domestic consumption of software (net of public sector purchases), and the expenditures of new companies under construction (in the absence of coverage of such companies in the present corporate finance studies, provisional estimates of capital formation have been added to the corporate sector’s capital formation based on these studies) (vii) treating the operating losses of departmental commercial undertakings as imputed subsidies, in line with the practice currently followed for irrigation departments.

Changes in the level of GDP in the New Series

10.       Normally, when the base year of national accounts statistics is changed, there is some change in the levels of GDP estimates.  This happens due to widening the coverage and inclusion of long-term survey results. 

 11.       The statement below illustrates the changes in the levels of GDP due to the introduction of the new series of national accounts. The increase in the level of GDP in the new series ranges from zero to 1.7 per cent during 1999-2000 to 2004-05.

 Table 1: GROSS DOMESTIC PRODUCT (AT CURRENT PRICES)
(RS. CRORE)

 

YEAR

NEW SERIES

(BASE YEAR 1999-2000)

OLD SERIES

(BASE YEAR

1993-94)

PERCENTAGE

DIFFERENCE

1999-2000

17,92,292

17,61,838

1.7

2000-01

19,30,184

19,02,999

1.4

2001-02

20,97,446

20,81,474

0.8

2002-03

22,55,574

22,54,888

0.0

2003-04

25,43,396

25,19,785

0.9

2004-05

28,43,897

28,30,465

0.5

Growth rates of GDP in the new series

12.       There are no major changes in the overall growth rates of GDP at constant (1999-2000) prices with the change in the base year, although there are changes in growth rates at sectoral level.  The major change is in the year 2004-05 Quick Estimates, which is due to the availability of detailed data at sectoral level, whereas the earlier estimates were based on indicators.  The growth rates in the new and old series are shown in Table 2. 

 

Table 2: GROSS DOMESTIC PRODUCT (AT CONSTANT PRICES)

(RS. CRORE)

 

YEAR

NEW SERIES

(BASE YEAR 1999-2000)

OLD SERIES

(BASE YEAR

1993-94)

GROWTH RATES

NEW SERIES

OLD SERIES

1999-2000

17,92,292

11,48,367

 

 

2000-01

18,70,387

11,98,592

4.4

4.4

2001-02

19,78,055

12,67,945

5.8

5.8

2002-03

20,52,586

13,18,362

3.8

4.0

2003-04

22,26,041

14,30,548

8.5

8.5

2004-05

23,93,671

15,29,408

7.5

6.9

 13.       The weighting pattern of various sectors in the GDP in the old and new series for the year 1999-2000, is presented in Table 3.

 

Table 3: WEIGHTS OF VARIOUS SECTORS IN THE NEW SERIES

AND OLD SERIES FOR THE YEAR 1999-00

 

INDUSTRY

NEW SERIES

(BASE YEAR 1999-2000)

OLD SERIES

(BASE YEAR

1993-94)

1

  agriculture,forestry & fishing

25.3

26.2

1.1

  agriculture

23.2

24.0

1.2

  forestry & logging

1.1

1.1

1.3

  fishing

1.1

1.1

2

  mining & quarrying

2.3

2.3

3

  manufacturing

14.7

15.1

3.1

  registered

9.7

9.7

3.2

  unregistered

5.1

5.4

4

  elect. gas & water supply

2.5

2.4

5

  construction

5.9

6.0

6

  trade, hotels & restaurant

14.2

14.0

6.1

  trade

12.9

13.0

6.2

  hotels & restaurants

1.2

1.0

7

  transport,storage & comm.

7.4

7.1

7.1

  railways

1.1

0.9

7.2

  transport by other means

4.6

4.6

7.3

  storage

0.1

0.1

7.4

  communication

1.6

1.5

8

  financing,insurance,real

  estate & business services

13.0

12.5

8.1

  banking & insurance

5.9

6.8

8.2

  real estate,ownership of

   dwellings & business services

7.1

5.8

9

  community,social

  &  personal services

14.7

14.4

9.1

  public administration & defence

6.7

6.6

9.2

  other services

8.1

7.8

10

  gross domestic product at

  factor cost (1 to 9)

100.0

100.0

 

STATEMENT 1: NATIONAL PRODUCT, CONSUMPTION EXPENDITURE, SAVING  AND CAPITAL FORMATION

STATEMENT 2: PRICE AND QUANTUM INDICES (1999-2000 = 100)

STATEMENT 3.1: GROSS DOMESTIC PRODUCT AT FACTOR COST BY INDUSTRY
STATEMENT 3.2: ANNUAL GROWTH IN GROSS DOMESTIC PRODUCT AT FACTOR COST BY  INDUSTRY
STATEMENT 3.3:PERCENTAGE DISTRIBUTION OF GROSS DOMESTIC PRODUCT AT FACTOR
COST BY INDUSTRY
STATEMENT 4.1: NET DOMESTIC PRODUCT AT FACTOR COST BY INDUSTRY
STATEMENT 4.2: ANNUAL GROWTH IN NET DOMESTIC PRODUCT AT FACTOR COST BY INDUSTRY
STATEMENT 4.3 : PERCENTAGE DISTRIBUTION OF NET DOMESTIC PRODUCT AT FACTOR COST BY INDUSTRY
STATEMENT 5.1: PRIVATE FINAL CONSUMPTION EXPENDITURE BY ITEM IN DOMESTIC MARKET
STATEMENT 5.2 : PERCENTAGE DISTRIBUTION OF PRIVATE FINAL CONSUMPTION EXPENDITURE BY ITEM IN DOMESTIC MARKET
STATEMENT 6 :  DOMESTIC SAVING BY TYPE OF INSTITUTION
STATEMENT 7.1 : CAPITAL FORMATION BY TYPE OF ASSETS AND BY TYPE OF INSTITUTION
STATEMENT 7.2 :  GROSS CAPITAL FORMATION BY INDUSTRY OF USE
STATEMENT 8 :  PERFORMANCE OF PUBLIC SECTOR@@
STATEMENT 9 :  INCOME AND OUTLAY ACCOUNT OF THE ADMINISTRATIVE DEPARTMENTS INCLUDING DEPARTMENTAL ENTERPRISES OTHER THAN RAILWAYS AND COMMUNICATION@@
STATEMENT 10 :  CAPITAL FINANCE ACCOUNT OF THE ADMINISTRATIVE DEPARTMENTS INCLUDING DEPARTMENTAL ENTERPRISES OTHER THAN RAILWAYS AND COMMUNICATION@@