Some Issues in the Measurement of Real Gross Value Added Growth and Employment Growth in Indian Manufacturing

In the context of the India KLEMS database, which is consistent with and based on India’s National Accounts Statistics, the paper raises certain issues regarding the measurement of real GVA (gross value added) in (a) the coke and petroleum products industry, (b) the information technology and telecom equipment manufacturing industry (which is a part of the electrical and optical equipment manufacturing industry), and (c) the gems and jewellery industry (which is a part of the miscellaneous manufacturing industry). The need to use an appropriate output deflator and adopt the double deflation procedure is emphasised and implemented in all three cases. Accordingly, the series on real GVA for the three industries in the India KLEMS database is modified. Similarly, an important issue is raised about the construction of employment series for manufacturing in the India KLEMS database, and a case is made for adjusting upward the manufacturing employment series in the India KLEMS database from 2017-18 onwards. With this adjustment in the employment series in the India KLEMS database, the estimated employment in manufacturing in 2017-18 exceeds that in 2011-12 by about four million workers, whereas the original series shows a downward trend in manufacturing employment post-2011 and several studies have reported a fall in India’s manufacturing employment between 2011-12 and 2017-18. An analysis of productivity trends based on the modified GVA and employment series is presented in the paper. Although the estimates of labour productivity and TFP at the aggregate level of Indian manufacturing do not change much after making the modifications described above to the data, there is methodological improvement in the industry-level productivity estimates