FIRST ADVANCE ESTIMATES

FIRST ADVANCE ESTIMATES

Subject : Economics

Context : Pulled down by a sharp contraction in the services, manufacturing and mining sectors, India’s gross domestic product (GDP) will contract 7.7 per cent in the current financial year as against a growth of 4.2 per cent in the previous fiscal.

Concept :

• National Statistical Office has released the first advance estimates for India’s GDP for the year 2020-21.
• The estimates will be based on the growth numbers of the first two quarters of the current fiscal as well as other higher frequency data.
• The data is typically released one month ahead of the presentation of the Union budget.
• Prior to 2017, the first advance estimate used to be released in the last week of January as the budget was presented on 28 February.
• However, since 2017, the data has been released in the first week of January to help the government prepare its budget presented on 1 February.

First Advance Estimates and their significance

• The First Advance Estimates (FAE) extrapolate a variety of data, such as the Index of Industrial Production (IIP), the financial performance of listed companies, first advance estimates of crop production etc., for the first 7 to 8 months to arrive at the annual figure.
• The significance of the FAE is that this is the final bit of official data before the government presents its next Budget.
• The sector-wise Estimates are obtained by extrapolation of indicators like-

IIP of first 7 months of the financial year,

financial performance of Listed Companies in the Private Corporate sector available upto quarter ending September, 2019

1st Advance Estimates of Crop production,

accounts of Central & State Governments, information on indicators like Deposits & Credits, Passenger and Freight earnings of Railways, Passengers and Cargo handled by Civil Aviation, Cargo etc., available for first 8 months of the financial year.