According to newspaper reports, the Central Statistical Organisation (CSO) is updating its methodology to capture the real value addition recorded in the information technology sector. The move is expected to lead to an increase of 1% or Rs 180 bn in India's Gross Domestic Product (GDP).
According to current estimates, the annual value addition in the information technology (IT) sector is a paltry Rs 5 bn. The main reason cited for this anomaly is difficulty in the collection of data on small businesses.
Although the move might seem as an attempt to shore up India's GDP growth, it is a step in the right direction. Indian economic numbers have long been criticised for underestimating the value of the country's aggregate output. This is mainly due to the lack of an extensive and efficient data collection system. As a result of this, small business, both in services and manufacturing sectors, and agricultural output of marginal farmers tends to get ignored for the purpose of computation of national income.
The CSO is now taking steps to increase interaction with the industry to increase accuracy of its data. Apart from this, the CSO now plans to declare quarterly estimates of the GDP, keeping in line with the IMF data dissemination standards.
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