1.20           ndian     onom
           Putting ‘indirect taxes’ and ‘subsidies’                          basic prices16 instead of factor cost. The
     together, India’s National Income will thus be                          relationship between GVA at factor cost,
     derived with the following formula (as India does                       GVA at basic prices, and GDP (at market
     it at factor cost):                                                     prices) is given below:
           National Income at Factor Cost = NNP at                           GVA at basic prices = CE + OS/MI +
     Market Cost – Indirect Taxes + Subsidies                                CFC + production taxes less production
        rEvision in thE BasE yEar anD                                        GVA at factor cost = GVA at basic
        mEthoD of national incomE                                            prices – production taxes less production
        accounting                                                           subsidies.
                                                                             GDP = GVA at basic prices + product
     The Central Statistics Office (CSO), in January
                                                                             taxes – product subsidies.
     2015, released the new and revised data of
     National Accounts, effecting two changes:                               [Where, CE : compensation of employees;
                                                                             OS: operating surplus; MI: mixed
           1. The Base Year was revised from 2004–05
                                                                             income; and CFC: consumption of fixed
                to 2011–12. This was done in accordance
                                                                             capital (i.e., depriciation). Production
                with the recommendation of the National
                Statistical Commission (NSC), which                          taxes or production subsidies are paid
                had advised to revise the base year of all                   or received with relation to production
                economic indices every five years.                           and are independent of the volume of
                                                                             actual production. Some examples of
           2. This time, the methodology of calculating
                                                                             production taxes are land revenues, stamps
                the National Accounts has also been
                                                                             and registration fees and tax on profession.
                revised in line with the requirements
                                                                             Some production subsidies are subsidies
                of the System of National Accounts
                                                                             to Railways, input subsidies to farmers,
                (SNA)-2008, an internationally accepted
                                                                             subsidies to village and small industries,
                                                                             administrative subsidies to corporations
     The major changes incorporated in this revision                         or cooperatives, etc. Product taxes or
     are as given below:                                                     subsidies are paid or received on per unit
           (i) Headline growth rate will now be                              of the product. Some examples of product
                measured by GDP at constant market prices,                   taxes are excise tax, sales tax, service tax
                which will henceforth be referred to as                      and import and export duties. Product
                ‘GDP’ (as is the practice internationally).                  subsidies include food, petroleum and
                Earlier, growth was measured in terms of                     fertilizer subsidies, interest subsidies given
                growth rate in GDP at factor cost and at                     to farmers, households, etc., through
                constant prices.
                                                                      16. The basic price is the amount receivable by the
          (ii) Sector-wise estimates of Gross Value                       producer from the purchaser for a unit of a good or
                Added (GVA)15 will now be given at                        service produced as output minus any tax payable
                                                                          (such as sales tax or VAT the buyer pays), and plus any
       15.    GVA, which measures the difference in value                 subsidy receivable, on that unit as a consequence of its
              between the final good and the cost of ingredients          production or sale; it excludes any transport charges
              used in its production, widens the scope of capturing       invoiced separately by the producer. In other words,
              more economic activity than the earlier ‘factor cost’       the basic price is what the seller collects for the sale,
              approach—a sum of the total cost of all factors used to     as opposed to what the buyer pays.
              produce a good or service, net of taxes and subsidies.