Estimating State Income at Market Prices in Gujarat

Girja Sharan, Trivedi R S and Shah R J

No WP2002-12-03, IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department

Abstract: The paper provides detailed estimates of the Gross State Domestic Product (GSDP) at current market prices (m.p.) for Gujarat state for the period 1990-91 to 2000-01. It considers the estimates of GSDP at current factor cost (f.c.) and the 6 components of the indirect taxes and subsidies to derive the estimates of GSDP at m.p. These components are: (1) State indirect taxes, (2) state level subsidies, (3) octroi, (4) states share in Central subsidies, (5) states share in Central excise, and (6) states share in Central customs revenues. It is found that compared to the NSDP at f.c., the GSDP at m.p. was 38% higher in 1990-91 but 44% higher in 2000-01 in Gujarat. On the other hand, at the national level, this difference has declined from 24% to 23% during the same period. For various uses of comparing fiscal performance of different state economies, the right concept to use is GSDP at m.p. and not NSDP at f.c., which is apology but apology by credit-rating agencies, RBI, Finance Commissions, etc. This leads to erroneous assessment of needs, biased perception of performance and wrong conclusions on efficiency of different state economies. It is shown in the paper that it is possible to prepare usable estimates of GSDP at m.p. with the help of the existing statistical network in the country.

Date: 2002-12-03
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