16-Estimation of Capital Formation at State Level.pdf - Mimts.org

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28 The journal of income and wealth the estimation of change in stock is not conceptually viable or feasible at the state level due to open boundaries of the states. Moreover the estimates of change in stock are subject to higher fluctuations. Thus, it was felt that at the state level, GFCF would be a better indicator of capital formation. For measurement of GFCF at state level, only expenditure approach can be adopted as the other two methods require data on imports and exports of capital goods across the state boundaries and net inflow of resources from outside the state, which are not available. www.IndianJournals.com Members Copy, Not for Commercial Sale Downloaded From IP - 115.248.73.67 on dated 29-Nov-2010 Estimates of GFCF at state level are not presently compiled by the CSO because of nonavailability of state-wise details on capital expenditures made by the two institutional sectors namely (I) private corporate sector and (II) household sector. The only institutional sector for which GFCF estimates are available is in respect of the public sector. Although data on GFCF in respect of the private corporate sector at the national level are available from the Studies of Company Finances conducted by the RBI, such details are not available at state level due to the small sample size adopted by the RBI for these studies. Further, the blow-up factor adopted for the national level estimates is the paid-up capital (PUC), details of which are not available at state level. Similarly for the household sector, though data for benchmark years for pure households are available from the AIDIS, detailed data on GFCF for the unincorporated enterprises are not available. The benchmark enterprise surveys conducted by the CSO/NSSO also do not give reliable estimates of GFCF at state/regional level. Hence, the major bottlenecks in the compilation of state level GFCF refer to the private corporate sector and household sector. However, in the recent years, CSO has taken initiatives to compile the estimates of GFCF at state level particularly for the private sector using various sources of data. For public sector, information is available from budget documents and annual reports of public enterprises, to a large extent. The GFCF of supra-regional sectors like railways, communication, Banking and Insurance, Public administration and Defence and supra-regional part of central government administration, central departmental commercial undertakings (DCUs) and central nondepartmental commercial undertakings (NDCUs), are prepared by the CSO and supplied to states annually. The estimates of GFCF for the local bodies has been compiled by analysing the budgets of a sample of local bodies. In the case of private sector, the method that has been adopted is to distribute all India GFCF in the private sector in respect of specific industries over the states using appropriate indicators from various benchmark enterprise surveys conducted by the CSO and NSSO. Adopting this approach, CSO recently compiled State wise estimates of GFCF for the year 2004-05 and the same were discussed with the states during the regional workshops. Moving forward in this direction, in the present paper, estimates of GFCF at state level have been prepared for the private sector by different industry of use for the years 1999-2000 to 2005-06 using the latest available data. II. Approach for compilation of GFCF at the State level The whole state economy has been grouped into specified user industries on the same lines as done for the gross domestic product (GDP). Estimates of the GFCF at state level can then be prepared separately for the public sector, private sector and supra-regional sectors. This is a slight deviation from the method adopted for the national level estimates to the extent that the two institutions sectors, namely private corporate sector and household sector are clubbed together
ESTIMATION OF CAPITAL FORMATION AT STATE LEVEL 29 www.IndianJournals.com Members Copy, Not for Commercial Sale Downloaded From IP - 115.248.73.67 on dated 29-Nov-2010 for the state level estimates. GFCF of the private sector can then be estimated by collecting data at regular periodic intervals, compiling satisfactory benchmark estimates in every few years and moving the same by means of appropriate indicators or by allocation of national totals among the states by meaningful indicators. Private sector comprises all non government joint stock companies, co-operatives societies, private banks, private insurance companies, quasi corporate bodies and household sector. The household sector includes, apart from individuals, all non-government, non-corporate enterprises like sole proprietorships and partnerships owned and/or controlled by individuals and non-profit institutions which furnish educational, health, cultural, recreational and other social and community services to the households. Allocation of expenditure on construction activity in the form of off shore drilling for oil and Natural gas like Bombay high have not been allocated to any state as recommended by the RAC. The All India estimates of GFCF by industry of use as published in NAS 2008 have been allocated among the States using suitable indicators and using data sources as discussed in following paragraphs. III. Methodology Agriculture including livestock For preparing the estimates of GFCF in Agriculture, results of All-India surveys on Debt and Investment (AIDIS) conducted in 2002-03 by the NSSO in the 59 th round have been used. This report gives the fixed capital expenditure on different items of farm business including livestock used as fixed assets. Firstly, the GFCF estimates for household sector have been prepared on the basis of AIDIS results . Then the all India estimates of Private corporate sector have been distributed over states using the state level estimates of Gross value Added (GVA) of Agriculture for the year 2002-03. Then, for arriving at the estimates for the other years, the sum of GFCF of household and private corporate sector is moved forward and backward on the basis of state wise growth of GVA of agriculture industry. Forestry and logging Almost all forests are owned by the government and hence this industry is mainly covered by the public sector. However a small portion exists in the private sector. The GFCF estimates have been prepared on the basis of data available in the publication ‘Forestry Statistics in India, 1996’. This report provides information on area under forest departments, corporate bodies and private forest. The estimate of national level GFCF in the private sector has been allocated over the states on the basis of statewise information on ownership pattern of corporate /private bodies. Fishing The state-wise estimates of GFCF have been obtained by allocating the national level estimates using the state-wise fish production taken from Department of Animal Husbandry, Dairying and Fisheries, Ministry of Agriculture. Livestock Census provides information on number of mechanized boats, traditional boats (motorized & non-motorised) and number of fishing gears.
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