Monetary Policy Department and Department of Statistical Analysis and Computer Services & Reserve Bank of India, Mumbai.
JEL Classification: E01
The revision of SNA93, due by 2007-08, is expected to bring about several conceptual and computational changes in national accounts statistics. The impact of such changes on financial sector's contribution to GDP seems to be quite significant. The concept of ‘intermediation’, as considered in the revision, is fairly broader and includes several other services, viz., ‘monitoring services’, ‘convenience services’, liquidity provision services’, etc. These changes are conceptually intricate and would also be challenging for implementation. This paper presents a prospective view of the ensuing changes as debated at the international forums. In addition, two key issues, namely, the valuation of GDP of banking sector at constant prices followed until recently and the treatment of non-performing loans of banks in national accounts are discussed. For valuation, the paper suggested an alternative method and shown by a simple exercise that the approach of valuation hitherto followed was significantly underestimating the contribution to GDP of banking sector. In addition, the paper highlighted that the adjustment of FISIM for the incidence of non-performing loans will have significant effects on the estimated macroeconomic aggregates on financial activities.
