Government and NPISHs Final Consumption

1. Government and NPISHs Final Consumption Present practice in India Session III: 26.4.2011 P.Bhanumati and Anindita Sinharay Ministry of Statistics & Programme Implementation, India

2. Schedule of Presentation • Statistical System in India • Government Final Consumption Expenditure • Final Consumption Expenditure of NPISH

3. Statistical System in India

4. Institutional Arrangement for Statistics in INDIA • India has a federal structure of Governance. • There are 35 States/UTs. • States are further divided in the Districts. • In all there are 600 Districts. • Responsibilities are divided for administration between the Central Government and the State Governments. • Statistics comes under the Concurrent List, where both the Union and State Governments can operate.

5. Statistical System at the Centre • Ministry of Statistics and Programme Implementation (MOSPI) is the nodal agency for a planned development of the statistical system in the country and for bringing about coordination in statistical activities among statistical agencies in the Government of India and the States. • The collection of statistics for different subject-specific areas, like agriculture, labour, commerce, industry, health and education etc. rests with the corresponding administrative ministries. Contd…

6. Statistical System in the States • The Statistical System in the States is similar to that at the Centre. • At the apex level is the Directorate of Economics and Statistics (DES), which is responsible for the coordination of statistical activities in the State. • Departments of the State Governments, such as, agriculture or health, have large statistical divisions for the work of departmental statistics. • The Directorate of Economics and Statistics in the States keep liaison with the CSO for purpose of coordination at all-India level.

7. Role of State (DESs) in Compilation of Regional Accounts • The estimates are prepared by the State Income Unit of the respective State Directorates of Economics and Statistics (DESs). • At present all the states, regularly prepare estimates of total and per capita income both at current and constant prices. • The Central Statistics Office assists the States in the preparation of these estimates by rendering advice on conceptual and methodological problems.

8. Final Consumption Expenditure by Government

9. GDP by Expenditure Approach GDP at purchasers prices by the expenditure approach = Final consumption expenditure (by households, government, non-profit institutions serving households) + Gross capital formation (gross fixed capital formation +changes in inventories+ acquisitions less disposals of valuables) + Exports of goods and services, f.o.b. - Imports of goods and services, f.o.b.

10. Who can incur Final Consumption Expenditure? • Institutional units are; • General Government • Corporations • Households • NPISHs • Only Government, Households and NPISHs can incur final consumption expenditure. • All consumption expenditure of Corporations is intermediate consumption expenditure.

11. General Government • Producers of government services: - administrative departments - departments of government - local authorities

12. Final Consumption Expenditure by Government Includes • Expenditure on individual services (e.g. education and health) and collective services (e.g. general administration and defence) produced by government itself • Expenditure on consumption goods and services purchased by government from market producers and supplied directly to households without further processing, i.e. as social benefits in kind. •  The value of the consumption of output is equal to the value of output minus any sales receipts. These include receipts from fees and charges that are not economically significant and, to a minor extent, receipts from sales of market output

13. Final Consumption Expenditure by Government • GFCE = gross output of administrative departments = total current expenditure of the administrative departments for producing government services = Intermediate consumption + Compensation of employees + Consumption of fixed capital • The SNA recommends that government consumption be classified by purpose according to the Classification of the Functions of Government (COFOG).

14. Sources of data and analysis • Budget documents of government • Annual Financial Statements giving the receipts and disbursements for every financial year are laid before the Parliament/State Legislature • Each item classified based on purpose classification (in the line of COFOG) and economic classification • Summing over all items to get purpose wise and economic classification wise estimates

15. Quality and Limitations of database • Variation in the presentation of details under various heads from state to state • Lack of details of expenditure under “plan schemes”; proxy indicators for the economic classification • Complete annual accounts not available for all local bodies/ autonomous institutions.

16. Final Consumption Expenditure of NPISH

17. Final consumption of NPISHs • Presently no separate estimate is prepared for final consumption by NPISHs in India. • The estimate of final consumption by household sector and NPISHs together is prepared and presented in Indian national accounts statistics. • Estimates are prepared using commodity flow approach.

18. Final consumption of NPISHs Efforts Made- • Survey for identifying NPISHs and preparing their accounts: just completed; • Accounts formed using data of 4 lakh out of the 31 lakh Non-Profit Institutions Serving Households. • More surveys required for incorporation into National Accounts.