Even so, the economy’s number-crunchers have a method to their madness. The starting point of the GDP estimate is often the sector.
At best of times, estimating a country’s gross domestic product can be an inexact science. Add the size of the black economy, the huge unorganised sector, and several new industries that tend to spring up suddenly, and GDP estimation can even become a shot in the dark.
Even so, the economy’s number-crunchers have a method to their madness. The starting point of the GDP estimate is often the sector. Each sector of the economy has a database, which is tapped for an initial estimate of output. The final numbers are extrapolated from here. Given below is a brief overview of how it all happens.
Primary sector
Agriculture: The main source is the land records system and yield experiments - 500,000 experiments are carried out on 50 principal crops which account for 70% of agricultural output.
Forestry and logging: The main sources are budget documents that record revenue earned from forests.
Fishing: Surveys are carried out to estimate marine and inland fish catches
Mining and quarrying: Annual reports of public sector undertakings (since this activity is largely in the public sector) and budget documents are the main sources of information.
Industry
Manufacturing: The Annual Survey of Industries is a key source, but since this comes with a two-year lag, the index of industrial production is used for the advance and quick estimates. Electricity, gas and water supply: The mother-lode comes from reports of public sector undertakings
Construction: The total quantity of cement, bricks, steel, fixtures and fittings is taken first. Since they account for roughly 70% of construction inputs, the output of the sector is calculated from this base
Services
Trade, transport, storage and communication; financing, insurance, real estate and business services; public administration and defence and other services: This sector is segmented into three categories — public sector, private corporate sector and private unorganised sector.
The public sector data comes from budget papers and public sector reports. The private corporate sector data comes from the Reserve Bank of India’s company finance releases. The private organised sector data is calculated in a complicated manner. Data on employment and unemployment and the population census is used for estimating the number of employed in the workforce. Then the value-added per employee is estimated with the help of enterprise surveys that cover one industry at a time. Benchmark estimates are then got for the base year and then the data is extrapolated on the basis of selected indicators.
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