Local bodies in national accounts – conceptual and methodological issues

Local government sector is strong and important in national context. India has 3-tier system of local government and the structure of local government varies significantly regarding the size, topography and the population it serves. Keeping in view the vastness of this institutional unit and the predominant role it plays in national economy, appropriate coverage of local bodies in national accounts is essential. Various factors have played an important role in shaping the local bodies accountingin national accounts but it is still lacking a conceptual framework. This paper attempts to list out the methodological and conceptual issues relating to the measurement of Local government in national accounts. This paper also discusses the present methodology adopted by CSO in compiling macro aggregates of local bodies and recent development in the area of local body accounts after this subject has been added in the milestone of 13^th Finance Commissionguidelines.