THIRUVANANTHAPURAM: Gross domestic product (GDP) is no more the gold standard of fiscal performance. Henceforth, after the Centre adopted the System of National Accounts, it will be Gross Value Added (GVA).
While GDP is a measure of all the economic activities that take place within the state, GVA will be a measure of the value added by the economic activity.
Economists in developed countries have always vouched for the scientific superiority of GVA over GDP. Take for instance the digging of a deep well which finally ends up with no water.
This activity, though it resulted in nothing, will be included in the GDP. Not in GVA, as no value has been added. It was the adoption of GVA that seems to have called the state’s growth bluff.
The new measure has reworked the weightage for sectors. While agriculture and industry get a higher weightage, the services sector is given marginally lower points.
When growth calculations were made more scientific to reflect the ground reality better, the national growth showed a higher movement and the State’s growth slumped.
According to the latest calculations, Kerala’s slump began during 2013-14 when its growth was a paltry 4.34 percent, considerably lower than the national average of 6.9 percent during the same period.
Nonetheless, the state’s growth rate of 6.20 percent for 2014-15, though below national average, marks a dramatic improvement.
