Schettkat and Yocarini 2006).
8.5 7.8 7.2 60
40
20
0
Official estimate SPECIAL ARTICLE
Our efforts to indicate the magnitude of the overestimation of estimated using CMIE is more realistic, its annual growth rate the domestic output yielded the following results: gets reduced by 0.5% to 5.5% between 1993-94 and 2005-06, and
Notes
1 The services sector includes (i) trade, hotels and restaurants, (ii) transport, storage and communications, (iii) financing, insurance, real estate, and business services, and (iv) community, social and personal services.
2 Analysing the growth of the 1950s, K N Raj as early as in 1961, alluded to the problem of overestimation of services sector output due to an underestimation of the rise of their prices. See Mody (2006).
3 It is worth recalling Robert Solow’s famous quip that the effect of computers is everywhere, except in productivity estimates. The dispute in the US is now settled after improvements in the measurement methods. However, with little comparable efforts in India it is hard to expect a similar changes in the measured productivity in such a short time; therefore the output estimates are likely to be faulty.
4 Ideally, China is the best comparator. But the Chinese statistics are probably a bigger minefield than ours.
5 The US data is from the Bureau of Labour Statistics; data for Japan and Korea are from DataStream. We thank Bobray J Bordelon of Princeton University library services for providing the data.
6 Some may fault our comparison since these economies witnessed price declines in telecom services earlier than in India. But efforts to deflate with the earlier years do not alter our finding. Between 1992-93 and 2006-07, communications deflator declined annually at 5.7 % in India, but only 1.5 % in the US.
7 To minimise the problem of price indices in services, the Central Services Organisation apparently uses physical indicators to estimate the real output. But what if the physical indicators are poor, as in the case of the number of direct telephone lines, which is probably overestimated. Further, what if the revenue per telephone line falls within the spread of access, as seems to be the case recently. Therefore, there is no short cut to estimating accurately the number of lines in operations and the price of the service.
8 The CMIE dataset is not a panel; the number of companies included in it has gone up from about 2,000 in 1993-94 to about 6,000 in 2005.
9 To quote from a CMIE document: “The set of companies selected for this study is based on the availability of the audited unabridged annual accounts. … The first step in selecting companies was the identification of a global set on which all further selections would be performed. These were companies which had at least one account available during the period April 1998 and March 2006, and which were operational. By ‘operational’ we mean companies which had at least some sales. This excludes companies which had accounts but had not begun commercial activities” (CMIE 2006: 288).
january 31, 2009 EPW Economic & Political Weekly
hotels and restaurants) on the current
prices estimates.
17.35 The estimates of value added from Railways and Communication in public sector are based on up-to-date and reliable information. For the private sector, the estimates are not that robust as these are compiled mostly through indirect methods using proxy indicators, such as number of telephone connections or extrapolating with inter-survey growth rates in workforce (CSO 2007: .
Schettkat, Ronald and Lara Yocarini (2006): “
Private Organised Sector: Estimates of GVA relating to private corporate sector are prepared by using the results of the RBI study of the finances of a sample of companies. GVA of the sample companies is inflated by the ratio of paid-up capital (PUC) of all the companies engaged in trading activity (data obtained from the Ministry of Corporate Affairs) and PUC of sample companies. The constant-price estimates of private corporate segment are obtained by applying the GDP implicit deflator (GDP excluding the GDP of Trade,
