The Reserve Bank on Thursday switched back to the gross domestic product (GDP)-based measure to offer its growth estimates from the gross value added (GVA) methodology, citing global best practices.
Government had started analysing growth estimates using GVA methodology from January 2015 and had also changed the base year to 2018 from January.
While GVA gives a picture of the state of economic activity from the producers’ side or supply side, the GDP model gives the picture from the consumers’ side or demand perspective.
Deputy governor Viral Acharya today said the switch to GDP is mainly to conform to international standards.
“Globally, the performance of most economies is gauged in terms of gross domestic product (GDP). This is also the approach followed by multilateral institutions, international analysts and investors, and primarily they all stick to this norms because it facilitates easy cross-country comparisons,” Acharya told reporters at the customary post-policy presser.