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MoSPI Clarifies Q1 FY2026-27 GDP Estimates and New Methodology Changes
The Ministry of Statistics and Programme Implementation (MoSPI) provides clarification on the latest GDP estimates for Q1 of FY2026-27. It explains methodology concepts related to double deflation, interpretation of negative GVA deflator, reasons for GDP revisions, and statistical discrepancy in GDP estimation.
GDP Estimates and Methodology:
| Dimension | Key Details |
|---|---|
| Double Deflation | Double deflation provides for independently adjusting Gross Output and Intermediate Consumption to account for changes in price levels. |
| Double Deflation (Formula) | Under double deflation, Real GVA = Real Gross Output − Real Intermediate Consumption. |
| Double Deflation (Interpretation) | This method provides for a more accurate representation of real value added by separately considering output prices and input prices. |
| Negative GVA Deflator (Meaning) | A negative Gross Value Added (GVA) deflator does not necessarily indicate a decline in manufacturing prices. |
| Negative GVA Deflator (When it arises) | This situation may arise when input prices increase at a faster rate than output prices. |
| Negative GVA Deflator (Illustrative case) | If output price increases by 5% and input price increases by 10%, Real GVA may increase faster than Nominal GVA, and the implicit GVA deflator may become negative. |
| GDP Revision (Factors) | The revision comprises these factors: change in base year, improved data sources, new IIP data, introduction of PPI, methodological improvements, and successive revisions as better data becomes available. |
| Nominal GVA vs Real GVA | Real Gross Value Added (GVA) reflects the quantity effect, while Nominal Gross Value Added (GVA) incorporates both quantity and price effects. |
| Nominal vs Real GVA (Implication) | It is possible for output to decline while nominal GVA increases if price levels rise sufficiently. |
| Illustration (Mining sector) | For the mining sector, an increase in nominal GVA can occur with a decrease in real GVA. |
| GDP Estimation Approaches | Gross Domestic Product (GDP) may be estimated using the production approach and the expenditure approach. |
| Statistical Discrepancy (Principle) | In principle, GDP calculated by the production approach should equal GDP calculated by the expenditure approach. |
| Statistical Discrepancy (Why it occurs) | Discrepancies may occur due to use of different data sources, timing differences in data collection, incomplete or missing information, measurement errors or inconsistencies, and preliminary status of quarterly GDP estimates. |
| Statistical Discrepancy (Recording) | The resulting difference is recorded as a statistical discrepancy. |