The Indian economy recorded 6.9 per cent growth in 2013-14, almost 50 per cent higher than the 4.7 per cent estimated earlier, TCA Anant, Chief Statistician, Central Statistics Office (CSO), said on Friday.

The growth estimate was revised on account of the CSO’s move to adopt 2011-12 as the base year for computation of national incomes.

In January 2010, the base year had been fixed as 2004-05.

The move to alter the base year, along with changes in the conceptual framework for GDP calculations, could also have a salutary effect on the 2014-15 fiscal deficit situation.

New framework for GDP stats

The CSO has decided to adopt the international practice of presenting industry-wise estimates as ‘Gross value added at basic prices’ (GVA).

With this move, ‘GDP at market prices’ will be the basis for ascertaining GDP.

The earlier concept, which relied on ‘GDP at factor cost’ has been done away with.

The latest base-year revision and conceptual change to ‘GDP at market prices’ has prompted the CSO to peg the GDP growth for 2012-13 at 5.1 per cent, higher than the 4.5 per cent estimated under the earlier system.

The CSO, however, said that the level of revision in the latest instance is not large enough to affect ratios such as trends in public expenditure, taxes and public sector debt, which are conventionally analysed in terms of their ratios to nominal GDP.

Impact on fiscal deficit

The Centre had set a fiscal deficit target of 4.1 per cent of GDP for 2014-15.

Achieving this target will not be much of a challenge now that the GDP computation concept has been changed and also given that global oil prices have plummeted, say economists.

The advance GDP growth estimate for 2014-15 — to be released on February 9 — will be released under the new base year.

The quarterly estimates for the first, second and third quarters of this fiscal year will also be revised accordingly, official sources said.

Reacting to the CSO move, Anis Chakravarty, Senior Director, Deloitte in India, said it is heartening to see the Indian statistical machinery bringing the estimates closer to reality.

“These latest numbers are likely to give more elbow room to the Finance Minister in the upcoming Budget and we can expect infra spending to go up without the government dithering from its fiscal target.

Further, given the correct policy framework and a stable global growth environment, we could see the economy growing closer to the aspirational double-digit figure over the next few years,” Chakravarty said.