New GDP series may introduce more categories to track consumption basket

Panel report released by the National Statistics Office signals shift to more granular expenditure tracking

To track India’s household consumption patterns at a more granular level, the National Statistics Office is likely to introduce new categories under the upcoming gross domestic product (GDP) series, with 2022-23 as the new base year, according to a report of the sub-committee on methodological improvements for GDP released on Wednesday. 

For instance, butter and ghee are now part of a new category titled ‘oil and fats’, while ice cream has been placed under ‘sugar, confectionery, and desserts’. Earlier, all these items were covered under ‘milk and milk products’. The changes are aimed at aligning the classification with the Classification of Individual Consumption According to Purpose 2018, in line with recommendations of the United Nations Statistical Commission. 

The report said the 2022-23 Household Consumption Expenditure Survey will provide the national benchmark for item-wise private final consumption expenditure (PFCE) levels and for deriving basic quarterly shares. 

The new series will also provide housing services for central government employees as a key compensation component, valued using a “cost of production” approach. This method sums annual depreciation of government dwellings along with repair and maintenance costs, the report said. 

The value of housing services thus computed will be included in PFCE. The practice is intended to better capture compensation for government employees who are provided official accommodation instead of a house rent allowance. This marks a departure from the current 2011-12 series, where no such imputation was carried out. “This ensures that the compensation of these employees, and hence the valuation of services provided by the government, is properly captured in estimates of output for general government,” the report added. 

Gross value added (GVA) for the unincorporated sector is proposed to be estimated using data from the Annual Survey of Unincorporated Sector Enterprises and the Periodic Labour Force Survey. 

Other expenditure components in the quarterly accounts will also undergo methodological refinements, with greater reliance on administrative data. Government final consumption expenditure will continue to be extrapolated using quarterly revenue expenditure of the Centre and states, net of interest, and subsidies. Public administration and defence GVA will be quarterised based on compensation of employees, with adjustments for major pay policy changes. 

Change in stocks will move away from being derived through a simple growth average of agriculture, manufacturing, and mining. Instead, it will be built up using broad, industry-wise stock indicators, including quarterly financial results of listed companies. Valuables will be estimated from net imports of a wider basket of items, rather than being limited to gold and silver.

 

Refining the numbers

• Changes have been made to align with the Classification of Individual Consumption According to Purpose 2018
• The 2022-23 Household Consumption Expenditure Survey (HCES) will provide the national benchmark for item-wise PFCE levels
• New series will also impute housing services for central government employees as a key compensation component
• Butter & Ghee are now part of a new category called “Oil & Fats”