Thursday, October 19, 2017

CBS to revise gross domestic product basket

The Central Bureau of Statistics (CBS) is going to add new goods and services to the basket that is used for calculation of the gross domestic product (GDP) to reflect the more realistic economy.
The revision will also reflect changes in current economic activities and captures areas including information, communication and technology (ICT) and agriculture and livestock farming, which propped up in the last decade and have expanded in recent years but have not been covered by the national accounts at present, according to the director general of the CBS Suman Raj Aryal.
"After updating the GDP basket, the CBS will change the base year for calculation of national accounts to 2010-11 from 2000-01," he said, adding that the bureau will introduce the revised basket from 2019, if things go as planned. "It means the national accounts for fiscal year 2018-19 will capture the goods and services that are not currently used in calculation of the GDP."
The revision of the GDP basket is expected to give a boost to economic output because of inclusion of new economic activities, which will also help boost economic output.
Though developed countries revise the GDP base year every five years, the CBS has been revising the base year for calculation of national accounts every 10 years. In order to set the new base rate, the bureau is also preparing an internal research of its own surveys like Living Standard Survey (LSS), 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.
The CBS first launched national accounts figures in 1961-62, though it has been producing these data on an annual basis since 1964-65.
Currently, the CBS has divided the economy into three broad sectors; agriculture, industry and services, which have further been divided into 15 categories including agriculture and forestry, fishing, mining and quarrying, manufacturing, electricity gas and water, construction, wholesale and retail trade, hotels and restaurants, transport, storage and communications, financial intermediation, real estate, renting and business activities, public administration and defence, education, health and social work and other community, social and personal service activities. The agricultural sector contributes to around 30 per cent, industrial sector around 14 per cent and the services sector makes around 56 per cent to the economy.
Currently, 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.
"Output of all economic activities in a fixed location, including both formal and informal, will be surveyed," he said, adding that it will generate new statistics of employment generation, income, and expenditure and capital formation by those economic activities. 

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