Issues with the New System of Calculating National Income and GDP
The revised system of calculating national income and GDP, introduced in 2015, brought methodological improvements but also raised significant concern
Issues with the New System of Calculating National Income and GDP The revised system of calculating national income and GDP, introduced in 2015, brought methodological improvements but also raised significant concerns: Dependence on MCA-21 Database :
The new method relies heavily on corporate data from the Ministry of Corporate Affairs (MCA-21). However, many small and informal enterprises, which constitute a large part of India’s economy, are not covered, leading to underrepresentation of the informal sector. Inadequate Informal Sector Representation :
Despite efforts to improve coverage, the informal economy remains poorly captured. This skews GDP estimates, especially in a country where over 40% of the economy is informal. Base Year Limitation :
The base year (2011-12) does not reflect the structural changes in the economy, such as digitalization and post-pandemic shifts, leading to outdated comparisons. Transparency Issues :
The lack of clarity regarding assumptions and methodologies used …