Dr Ashfaq H Khan's article in Business Recorder of 28th June needs some detailed appraisal and comment. This scribe has made an effort to clarify the basic concepts on computing nation accounts.
The PBS computes the National Accounts according to well stated and publically shared parameters. The methodology is based on the System of National Accounts (SNA) 2008 which provides the internationally accepted and adopted methodology. This was followed during the Rebasing of National Accounts. This rebasing document was published as PBS document and is available on PBS website. This methodology has not been changed since its approval in April 2013.
The data used to compute the GDP numbers is provided by a host of agencies, public and private as well as Federal, Provincial and local authorities. These data sources are fixed as approved by the National Accounts Committee. The data providers are members of the National Accounts Committee meeting and verify the data provided by them. The data available for nine months, and in some cases for six months, is annualised and used. The numbers for government sector are taken from federal, provincial and local government budgets, as approved. Once parliament or assembly or house approves the revised budget, the revised numbers are adopted.
These GDP growth estimates are provisional estimates. As per international practice, this data will be revised after one year and will be finalised the year after. The data presented is provisional for 2015-16, will be revised in 2016-17 and finalised in 2017-18.
In light of the fact that the methodology is fixed and the data is provided by a large number of specified and fixed data sources, PBS has no space to compute numbers according to the desires or perceptions of others. These numbers are based on hard and verifiable data.
We recognize that there is no role of Economic Advisor nor his office in the calculation of GDP but the same situation prevailed many times earlier and the economic advisor never objected/criticised. Perhaps criticism is only possible when one is out of office.
The writer, while discussing the data pertaining to informal economy has questioned the sources and methodology adopted to compile wholesale and retail trade. The writer is well aware that the methodology for wholesale and retail trade is the same since 1980-81 rebasing. It is compiled on the basis of fixed ratios which parse do not affect the growth rates. It is only data which is relevant for the growth rates.
It has been repeatedly claimed by the critics that the agriculture decreased by -2.0 % instead of -0.2% as reported by the government for 2015-16. PBS does not have the luxury to change the data sources. They remain fixed. PBS has reported a decline in cotton of -27.8% for 2015-16 based on provincial crop reporting services. The critic has used PBS data for cotton for 2014-15 but has relied on SBP Second Quarterly Report FY16 for 2015-16 data. This report puts cotton crop variably at 10.9 million bales based on Cotton Crop Assessment Committee (CCAC), and 9.6 million bales as reported by PCGA. The writer has been selective in his choice of data.
The verifiable numbers reveal following picture of agriculture sector for 2015-16 as given in tables 1a, b below.
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Table 1a.
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Sectors/ Sub sectors Growth Rates Share in Contribution
2014-15 2015-16 GDP to GDP
/2013-14 /2014-15
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Agricultural Sector 2.53 -0.19 19.82 -0.04
1. Crops 1.04 -6.25 7.38 -0.52
i) Important Crops -0.52 -7.18 4.67 -0.38
ii) Other Crops 3.09 -0.31 2.25 -0.01
iii) Cotton ginning & Misc. 7.24 -21.26 0.46 -0.13
2. Livestock 3.99 3.63 11.61 0.43
3. Forestry -10.43 8.84 0.41 0.03
4. Fishing 5.75 3.25 0.43 0.01
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Table 1b.
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Sector 2014-15 2015-16 Share
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Agriculture 2.53 -0.19
Crops 1.04 -6.25 37%
Other than crops 3.53 3.78 63%
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In agriculture sector 37% component (Crops) declined by 6.3% whereas 63% component (other than crops) grew by 3.8% balancing each other. The net result is -0.2%. It will be appreciated if such detailed calculation of -2.0 % growth claimed by the doctor can be shared.
Regarding forestry, it is worth mentioning that it is a small sector. The figures provided by the provincial forest departments for 2014-15 showed a decline of 10.43%, therefore, the figures for 2015-16 seem to be very high but its contribution towards GDP growth is 0.03%. The data provided by provinces is verifiable.
A higher GDP growth despite a decline in agriculture is quite possible, given that economy has experienced major structural changes over time. Specifically, the share of agriculture in overall GDP has diminished considerably from 38 % in FY 1970-71 to 19.8% in FY 2015-16. (Table 2). At the same time the share of the crop sector in GDP has dropped by one third during this period (from 25.5 to 7.4 %). (Table 3). This means losses in agriculture would not have as serious consequences for the overall GDP growth as it used to be in the past.
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Table 2: Sectoral Share (%age) in GDP
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1970-71 1980-81 1999-2000 2005-06 2015-16
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Agriculture 38.0 26.4 25.9 23.0 19.8
Industry 20.2 22.9 23.3 20.9 21.0
Services 41.8 50.7 50.7 56.0 59.2
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Table 3: Share of Crops (%age) in overall GDP
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1970-71 1980-81 1999-00 2005-06 2015-16
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Crops 25.5 14.2 13.1 9.9 7.4
Other than Crops 74.5 85.8 86.9 90.1 92.6
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Table 4: Sectoral Share (%age) within Agriculture
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1970-71 1980-81 1999-2000 2005-06 2015-16
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Crops 67.2 53.6 50.7 43.2 37.2
Important Crops 51.8 39.6 37.1 25.3 23.5
Other Crops 15.4 14.0 13.6 14.5 11.4
Cotton Ginning 3.4 2.3
Other Agriculture 32.8 46.4 49.3 56.8 62.8
Live Stock 27.1 43.3 45.2 52.4 58.6
Forestry 0.9 2.2 2.5 2.0 2.1
Fishing 4.8 0.9 1.6 2.4 2.2
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The dismal growth in agriculture for FY 2015-16 could not pose serious threats to LSM sector. In fact, the growth in LSM was broad-base and emanated mainly from non-agro-based sectors e-g cement, auto sector, fertiliser, chemical, pharmaceutical, chemical, leather (Table 5.). Further the impact of cotton crop losses on the textile sector was limited due to available inventories of raw material from the previous year and cotton import in FY 2015-16 of 2.3 million bales.
The impact of negative agriculture growth on industry has also decreased over the years. In 2015-16 the LSM growth is 4.7 out of which the agro based industry including textile, food etc is 1.24 and the non-agro based industry has an impact of 3.46.(Table 5.)
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Table 5.
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Growth (%) 2014-15 2015-16
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Contribution Contribution Contribution Contribution
Major Groups Weight 2014- 2015- to LSM to GDP to LSM to GDP
15 16 Growth Growth Growth Growth
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LSM AGRO 70.3 3.39 4.70 3.39 0.38 4.70 0.53
BASED 33.4 1.80 2.41 0.94 0.11 1.24 0.14
Textile 20.9149 2.69 1.21 0.85 0.10 0.38 0.04
Food, Beverages and Tobacco 12.3703 0.44 4.27 0.09 0.01 0.86 0.10
NON-AGRO BASED 36.93 5.14 7.13 2.46 0.28 3.46 0.39
Coke and Petroleum Products 5.514 11.44 2.88 0.45 0.05 0.12 0.01
Pharmaceuticals 3.6204 9.22 7.87 0.60 0.07 0.54 0.06
Chemicals 1.7166 10.63 10.65 0.51 0.06 0.55 0.06
Non-Metalic Mineral Products 5.3643 3.60 10.94 0.33 0.04 1.00 0.11
Automobiles 4.6134 26.01 24.11 0.97 0.11 1.10 0.12
Iron and Steel Products 5.3916 37.71 -6.93 0.82 0.09 -0.20 -0.02
Fertilzers 4.4407 5.98 16.65 0.22 0.03 0.64 0.07
Electronics 1.9625 7.37 -9.46 0.09 0.01 -0.12 -0.01
Leather Products 0.85914 9.97 12.83 0.14 0.02 0.19 0.02
Paper and Board 2.3143 -8.19 -2.29 -0.59 -0.07 -0.15 -0.02
Engineering Products 0.4002 -17.60 -17.15 -0.27 -0.03 -0.21 -0.02
Rubber Products 0.2618 5.04 12.32 0.07 0.01 0.17 0.02
Wood Products 0.5876 -74.87 -57.78 -0.88 -0.10 -0.17 -0.02
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As far as the fixed growth rate of Small Scale and Household Manufacturing Industries, it is well known to the doctor that Small Scale manufacturing is very large Universe and cannot be evaluated on annual basis. Traditionally it remains fixed till a new survey is conducted. From 1999-00 to 2005-06 it was 7.51 fixed growth rate and since 2005-06 rebasing it is at 8.2 fixed. This will remain fixed till the results of next rebasing. Since it is fixed, its impact remains the same in the past year as well as current year.
For electricity generation & distribution and gas distribution sector, the data is collected from WAPDA and Companies, IPPs, captive units and gas distribution companies. The output of this sector includes the budgeted subsidy provided by the government as per SNA recommendations. This approach has been in use for previous years. This fact is being ignored by the independent experts. In Mining the production of limestone which has significant weight has increased by 23% along with many other mining products. Contribution of this sector in the overall GDP growth is 0.2% age points. Excluding housing sector from the construction, the remaining activity is relatively small. Even though it showed a growth of 13.1% its contribution to GDP is 0.3% age points. Systematically it is under estimated, however, in the change of base proper reflection will be ensured.
General government services figures are based on the budget documents of the Federal government, Provincial governments, District governments and cantonments. The data reveals following growth rates
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Table 6. General Government Services
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Financial Year Provisional Revised
Growth Growth
Rate Rate
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2012-13 5.60 11.32
2013-14 2.19 2.86
2014-15 9.44 4.82
2015-16 11.13
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This movement above 1.0 is understandable as household consumption expenditure is a residual item in national accounts. Interestingly, the case of MPC exceeding 1.0 is not just confined to Pakistan, but there are a number of countries both developing and developed where the MPC exceeds 1.0 Fig 2.
In view of the above facts and figures it is hoped that the learned critics will have more faith in PBS methodology and try to use verifiable data in their own computations.
(The writer is Chief Statistician Pakistan Bureau Of Statistics)
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