pape

Topics: Economics, Macroeconomics, Gross domestic product Pages: 7 (1904 words) Published: November 21, 2013
In the present case official forecast of India’s GDP is likely to grow at 7.6% in 12-13 and according to IMF it is likely to be 4.9%. IMF and India's official GDP estimates are not comparable as the two follow different methodologies - IMF computes GDP at market prices while India adopts the factor cost method.

The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation has released the advance estimates of national income at constant (2004-05) and current prices, for the financial year 2012-13.These advance estimates are based on anticipated level of agricultural and industrial production, analysis of budget estimates of government expenditure and performance of key sectors like, railways, transport other than railways, communication, banking and insurance, available so far. The advance estimates at current prices are derived by estimating the implicit price deflators (IPDs) at sectorial level from the relevant price indices.

IMF computes GDP at market prices

IMF projects GDP growth of India based on the macro indicators of overall world economy. Indian GDP is estimated based on the govt expenditure and investment , estimates of consumption and as per production. India government makes five year plan for the same & GDP is based on that only. The difference in the computations could be on two fronts — indirect taxes and subsidies. This means, if indirect tax collections are huge and subsidies subdued, GDP growth at market prices would be higher than its counterpart at factor cost.

Application Exercise (Marks 20)(Common to Session 9 & 12)
(Assignment to be submitted)(180 min)

Your Company’s Business Plan may have to be re looked periodically, more so when the downturn continues. At the same time various parameters of your Business Plan are embedded in the overall national economic as well as global economic environment depending on your company’s global exposure. Illustratively, according to official forecast of India’s GDP is likely to grow at 7.6 % in 2012-13 but according to IMF it is likely to be 4.9 %. •What in your opinion leads to a difference in the forecast , also given the situation, what forecast you are going to choose and why? Substantiate your answer using statistical methods to determine accuracy of the forecasts. What are the major economic parameters that you should carefully monitor so as to eventually work out /revise your company’s business plan for the next quarter/half year/year? Provide forecast numbers for those parameters.

Ans :

In the present case official forecast of India’s GDP is likely to grow at 7.6% in 12-13 and according to IMF it is likely to be 4.9%. IMF and India's official GDP estimates are not comparable as the two follow different methodologies - IMF computes GDP at market prices while India adopts the factor cost method.

The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation has released the advance estimates of national income at constant (2004-05) and current prices, for the financial year 2012-13.These advance estimates are based on anticipated level of agricultural and industrial production, analysis of budget estimates of government expenditure and performance of key sectors like, railways, transport other than railways, communication, banking and insurance, available so far. The advance estimates at current prices are derived by estimating the implicit price deflators (IPDs) at sectorial level from the relevant price indices.

IMF computes GDP at market prices

IMF projects GDP growth of India based on the macro indicators of overall world economy. Indian GDP is estimated based on the govt expenditure and investment , estimates of consumption and as per production. India government makes five year plan for the same & GDP is based on that only. The difference in the computations could be on two fronts — indirect taxes and subsidies. This means, if indirect tax...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Cat Pape Essay
  • Team Development and Maintenance Pape Essay
  • Just a Pape Essay
  • ENVIRONMENTAL POLLUTION PAPE Essay
  • Essay, Term Paper, or Research Pape
  • Essay about Emotionally Focused Couples Pape Finial
  • Reaction Pape Juan Tanga Essay
  • Guess Who S Coming To Dinner Final Pape Essay

Become a StudyMode Member

Sign Up - It's Free