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February 14, 2015

Importance of BASE YEAR - Recent GDP change in Base Year

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What is Base Year ?
A base year is the year used for comparison for the level of a particular economic index. The arbitrary level of 100 is selected so that percentage changes (either rising or falling) can be easily depicted

Why base year are changed ?
By every 10 years there is change  will be minimum 4% rise in price of items so base year has to be changed .

Importance in the change of base year in terms of GDP

CALCULATION
GDP growth rate = change in gdp/initial GDP * 100
GDP of any of the previous years is chosen as the intial GDP and the eyar that is chosenis known as the base eyar

Example

India GDP is rs-100 and the base eyar is 2000
now it has been changed now in 2015 -- the IT ,economy ,infra ,e-commerce are contributed more to base year need change

The change in base year
The govt of india will also coincide with other surveys that act as inputs in assigning weights in the National Income Accounts. In 2011-12, the five-yearly survey on employment and consumer expenditure will be repeated. They were carried out in 2009-10, but since bad monsoons would have affected employment and income growth, the surveys will need to be done again. The change in the base year of the GDP series is considered to be very important, as the other two major data series, IIP and WPI, are also expected to be changed to the same base year. "This is a step in the right direction.

Economists say high inflation in the current year could mean lower inflation figures in future while the present spell of slowdown could mean higher growth rates later. "Till now, 2011-12 has been a choppy year with a slowdown in growth and high inflation.

government, engineering an economic rebound with a slew of reforms, on Friday unveiled a new statistical method to calculate the national income with a broader framework that turned up a pleasant surprise: GDP in the past year 2013-14 grew 6.9% instead of the earlier 4.7%.
note _ ** with in upcoming  5 years the indian gdp will be around 9%

BASE YEARS OF LATEST INDEX
---------------------------------------------------------------
  • RESIDEX-- ----------------------------2007-- real estate , housing
  • BANKEX -------------------------------2002---- banking
  • STOCK MARKET --------------------1978-79--- stock market
  • IIP----------------------------------------2004-05---industries
  • CPI-IIW(industrial workers)----------2001-02
  • CPI-AL (agricultural labours)-------1986-87
  • CPI-RL (rural labours)---------------1986-87
  • CPI-UNME(urban non manual)-----1984-85
  • CPI-RURAL ----------------------------2010
  • CPI-URBAN-----------------------------2010
  • RUPEE BASE YEAR------------------1971
  • IAP(index of agricultural )------------2007-08
  • NSE -------------------------------------1983-84
  • BSE-- -----------------------------------1989-90
  • FTI---------------------------------------1999-2000-- foreign trade
  • NEER -- REER ------------------------1993-94
  • WPI---------------------------------------2004-05
  • CPI---------------------------------------2009-10(latest)
  • GDP--------------------------------------2011-12
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