Current Affairs

RBI Switches Back to GDP Model from GVA Model

The Reserve Bank of India has re-adopted the Gross Domestic Product based measure to offer its growth. Previously RBI was using Gross Value Added method for the same purpose.

RBI Switches Back to GDP Model from GVA Model

Reason

  • RBI cited the GDP method is globally the best method. 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. The switch to GDP is mainly to conform to international standards.
  • The government had started analysing growth estimates using GVA methodology from January 2015 and had also changed the base year to 2018 from January. 
  • 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, Even the Central Statistical Office (CSO) has started using GDP as the main measure of economic activities since January 15 this year,

Expected Questions

Which of the following measure is re-adopted by the Reserve Bank of India to estimate its growth?
a. Expenditure Method
b. Income Method
c. Gross Value Added Method
d. Gross Domestic Product Method
e. Othe than the above
RBI Switches Back to GDP Model from GVA Model RBI Switches Back to GDP Model from GVA Model Reviewed by insiya yadav on April 10, 2018 Rating: 5

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