The Union Ministry of Finance has said that the enterprises excluded from the MCA-21 database are involved in some form of economic activity, making them eligible for inclusion in estimation of the gross domestic product (GDP).
The statement was issued by the Ministry after the National Sample Survey Office’s (NSSO) Technical Report of Services Sector Enterprises in India said that as much as 36 percent units forming part of MCA 21 database, used in computing GDP, were either not identifiable or traceable in the field.
The Ministry said in a release that, “Some sections of the media have misinterpreted these out-of-survey enterprises (as classified for the purposes of surveying the services sector) to be enterprises that do not exist in the economy. On the basis of this interpretation, the suggestion has emerged that by not removing out-of-survey enterprises from the MCA database, Central Statistics Office (CSO) over-estimates the Gross Domestic Product of the country”.
The Ministry also explained that, ” the 38.7 percent out-of-survey enterprises in the NSSO report, out-of-coverage enterprises comprised 21.4 percent. These out-of-coverage enterprises were those that were not engaged in activities intended for inclusion in the service sector survey”.
“However, these enterprises are engaged in some economic activity, possibly in the manufacturing sector for instance,” the release stated.
“As a result, they cannot be classified as out-of-coverage enterprises for the purposes of estimating the GDP of the country. In other words, the GDP estimates based on the aforesaid out-of-coverage enterprises are very much a part of overall GDP of the country,” the statement said.
The MCA-21 database is used for estimating the GDP in the new series with 2011-12 as base.
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