GDP Calculation

CBS setting new base price of economic activities

Published On: October 26, 2017 03:45 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, Oct 26: The Central Bureau of Statistics (CBS) has started homework to calculate Gross Domestic Products (GDP) in a more realistic manner by covering newest economic activities as well as taking new base rates into consideration. 

Giving due weightage to economic output made by newest economic activities and calculating more realistic contribution of sectors like ICT, and agriculture and livestock farming, which propped up in the last decade and has expanded in recent years, among others, are in the plans, a CBS official told Republica.

The CBS is currently calculating GDP with the base rate of 2001 and calculation of contribution of other businesses, which came into existence later, are also estimated by referring to market prices in the base year i.e. 2001. This shows that the real value of the economic output is not being measured. 

Currently there are 17 broader sectors of economic activities in GDP and critics say several economic activities and contribution of the informal sector is being excluded in GDP calculation, indicating that the country's actual GDP growth rate is higher than the current rates. “

"The base rate for current prices of the GDP is very old. It doesn't make GDP calculation realist”c," Suman Aryal, director general of CBS, said.

In order to set the new base rate, CBS is also doing an internal research of its own surveys like Living Standard Survey, Agriculture Survey and ICT Survey, among others, and preparing to conduct a new economic census to measure the value of economic output starting from April next year.“

"Output of all economic activities in a fixed location, including both formal and informal, will be surveyed. It will generate new statistics of employment generation, income, and expenditure and capital formation by those economic activities," CBS officials say.

Setting of new base rates is also important to leave vanished economic activities in the recent years out of GDP calculation. For example, expansion of road network has reduced the use of mules and porters to carry loads in different hilly and mountainous district. 

Aryal said that they may pick prices of any fiscal years in between 2010/11 2014/15 for new base prices. He also said that the CBS was planning to implement the new base rate from the next fiscal year. 

If CBS takes new expansion of enterprises into account in GDP calculation, economic activities of institutions like Bikash Udhyami will come into counting of annual national income. Established in 2016, Bikash Udhyami is serving digital content like infographics of new dimension of development activities in the country and it provides jobs to over two dozen youths. Its CEO and founder Santosh Gartaula sai“: "Smartphone penetration to remote areas has significantly lowered cost of technology, making it affordable to ma”y."

ICT sector has witnessed a huge growth in recent year, while agricultural activities like livestock and commercial farming have seen robust growth over the decade. 
The base price must reflect economic structure created by changes in prices and demands in the market, added Aryal. 

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