National Income Accounting

Choose the Correct Answer

Correct Answer : Option b

Explanation
Statement 1 is not correct: In 2019, the Central Statistical Organisation (CSO) and the National Sample Survey Organisation (NSSO) were merged to form a unified entity known as the National Statistical Organisation (NSO).
NSO is mandated with the following responsibilities:-

It prepares national accounts as well as publishes annual estimates of national product, government and private consumption expenditure, capital formation, savings, estimates of capital stock and consumption of fixed capital, as also the state level gross capital formation of supra-regional sectors and prepares comparable estimates of State Domestic Product (SDP) at current prices.

The CSO now provides sector-wise estimates of GVA at basic prices instead of factor cost, as part of the new methodology. This change allows for a more accurate reflection of economic activity by accounting for production taxes and excluding subsidies, which was not done under the factor cost method.

Statement 2 is correct: GVA at basic prices includes production taxes (such as GST, excise duties) and excludes production subsidies. This provides a clearer picture of the economic value added by the production process before accounting for taxes and subsidies on products.

Statement 3 is correct: GVA at factor cost includes no taxes and excludes no subsidies. It focuses purely on the costs incurred in the production process, including factors like wages, rent, and profits, without considering the impact of taxes and subsidies.