At present, no state or union territory compiles estimates of private final consumption expenditure (PFCE), while some states estimate government final consumption expenditure (GFCE) and gross fixed capital formation (GFCF). The draft guidelines provide a methodology to address this gap. The aim is to improve the consistency and comparability of gross state domestic product (GSDP) estimates across states and union territories. The expenditure approach, which captures household and government consumption, investment, changes in inventories and valuables, and net exports, will complement existing production and income side estimates.
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“The draft guideline provides a uniform and comprehensive framework for compilation of GSDP estimates from the expenditure side across States and Union Territories, with the objective of ensuring consistency, comparability and methodological standardization under the revised base year framework,” the ministry said in a statement.
The draft also covers changes in inventories, valuables and net exports. However, it mentioned that state-level estimates of exports and imports of goods and services will be deferred until adequate data become available, in line with the relevant sub-committee’s recommendation.
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PFCE measures spending by households and non-profit institutions serving households. The proposed framework draws on the Household Consumption Expenditure Survey (HCES), population data and administrative records to estimate state-level expenditure.To estimate state-level PFCE, the draft proposes using administrative data alongside household consumption survey findings. These include vehicle sale-price data from the Vahan portal, domestic electricity consumption data from the Central Electricity Authority, and the Reserve Bank of India data on bank deposits and personal loans to allocate estimates for financial services across states/UTs
The guidelines outline methods to estimate government consumption and investment. For consumption, government budget documents, local authority accounts and administrative data are key sources. For allocating central government expenditure, the draft proposes using location-wise data from the Public Financial Management System. GFCF covers investment in fixed assets such as buildings, structures, machinery and equipment.