How India's new GDP series will track district economies
What's the story
India is gearing up to revamp its method of measuring economic output at the district level, a move that could help policymakers identify regional disparities more accurately. Saurabh Garg, Secretary of Statistics, told The Times of India that the upcoming changes in India's GDP series will focus on granular data. This would enable better estimates of District Domestic Product (DDP).
Existing approach
Current DDP estimation method and its limitations
At present, DDP estimates are based on a top-down allocation method. This involves proportionately distributing state-level GDP among districts using indicators like population. However, this approach often results in similar growth rates across districts, failing to capture real economic differences between regions. It also doesn't account for local economic shocks or the contribution of India's large informal sector.
Enhanced insights
Benefits of improved DDP estimates
Better DDP estimates could help governments identify lagging districts, assess regional inequality more accurately, and track employment trends more effectively. The responsibility for calculating DDP lies with the Directorates of Economics and Statistics (DES) of state governments. They work under the technical guidance of the National Statistical Office to produce these estimates.
Method transition
Transitioning to a new method
The central government plans to work closely with states to transition from the current allocation-based method to a more detailed, bottom-up estimation process. Garg said, "We want to do this in conjunction with the states because that's where the real policy decisions are." He added that they have shown great enthusiasm for this change.
Data integration
Integrating new datasets into the GDP series
The improved district-level estimates will also use new datasets being integrated into the upcoming GDP series. These include the Annual Survey of Unincorporated Sector Enterprises, which captures activity in the informal manufacturing and services sector, and the Periodic Labour Force Survey. Together, these surveys are expected to provide richer information on employment patterns and economic activities of households, micro, nano and small enterprises.