Historical Perspective • First attempt in 1961/62 by then Ministry of Economic Planning • Gap of two years • Responsibility shifted to CBS • Continuation after 1964/65 NA compilation practices • GDP predominantly based on Value added approach • Separate estimates of expenditure components except change in stocks • Change in stock: residually estimated • No explicit statistical discrepancy • Attempt to produce GDP by income approach Rebasing and linking practices Analytical and Mechanical re-referencing Base year • 1964/65 – Analytical and First NA series • 1974/75 – Analytical • 1984/85 – Analytical • 1994/95 – Mechanical linking • 2000/01 - Analytical Demand Components • Final Consumption Expenditure – Government – Households – Nonprofit institution serving households • Capital Formation – Gross fixed capital formation – Change in stocks • Net exports – Exports – Imports Measuring Household Consumption • HIES Resolution – Households Consumption Expenditure • Value of consumer goods and services acquired, used or paid for by a household through direct monetary purchases, own account production, barter or as income in kind for the satisfaction of the needs and wants of its members – Actual final consumption of Households • Sum of its household consumption expenditure and the value of consumer goods and services acquired or used by the household through transfers from government, non-profit institutions or other households Household Consumption • Major Data Source – – – – Household Survey Retail Survey Balance of payments Value added tax • Income and consumption link – functional relationship between disposable income and consumption • Commodity flow Compilation practice in Nepal • Independent estimates for – – – – – – Households final consumption expenditure Government final consumption expenditure NPISH final consumption expenditure Gross fixed capital formation Exports Imports • Residual – Change in stocks • Statistical Discrepancy – No explicit discrepancy – Change in stocks contains discrepancy also Compilation practice in Nepal • Household consumption largest single component – Accounting for around 80% of GDP • Benchmark data – Nepal Living Standards Survey (NLSS) – Balance of Payment • Extrapolation – Population growth rate – CPI for food, non food and service separately • Price system applied – Acquisition price – Includes non-deductable VAT and other taxes on products – Includes all types of margins • Income Consumption Link – Some exercise had also been carried out. Coverage and sources 1 2 3 4 5 6 7 8 9 Coverage Source Goods and services bought for final consumption by households NLSS* Goods produced for own final consumption by households NLSS Services of owner-occupied dwellings NLSS Goods and services acquired by households in barter transactions for final consumption NLSS Goods and services received by households as payment in kind from producers NLSS Expenditures incurred in “do- it-yourself” decoration, maintenance and routine repairs of own dwellings and personal goods NLSS Payment to government units to obtain various kinds of licenses, permits, certificates, passports NLSS* Explicit and imputed service charges on household uses of financial intermediation services provided by banks, insurance companies, pension funds NLSS* Purchases made outside the residence territory BOP Nepal Living Standards Survey Consumption related questions at a glance Classification adopted • COIPCOP – Not adopted yet • Disaggregation is based on – CPI components • Correspondence – NLSS consumption headings and CPI components Major CPI Components FOOD & BEVERAGES Grains and Cereal Products Pulses Vegetables and Fruits Spices Meat, Fish and Eggs Milk and Milk Products Oil and Ghee Sugar and Related Products Beverages Restaurant Meals NON-FOOD & SERVICES Cloth, Clothing & Sewing Services Footwear Housing Goods and Services Transport and Communication Medical and Personal Care Education, Reading and Recreation Tobacco and Related Products Actual Final Consumption • Sum of household consumption expenditure, individual consumption expenditure of Government and consumption expenditure of NPISH Consumption in Figure 2007/08 2008/09 2009/10 895,042 1,085,292 Final Consumption Expenditure 735,470 Government consumption 80,663 106,527 124,268 Collective Consumption 54,996 69,838 82,366 Individual Consumption 25,667 36,689 41,902 641,085 772,762 942,979 Food 385,037 484,552 598,818 Non-food 179,999 203,232 243,262 Services 76,049 84,978 100,899 13,721 15,753 18,045 Household consumption Nonprofit institutions serving households Actual final consumption expenditure of households in millions Rs. 680,474 825,204 1,002,926 Typical Issues • Credit issues – may involve three distinct components • price of the goods itself- It is Consumption • expenses of the financial company making loan: It is Consumption • interest payments: Not consumption • No such distinctions are made • Unincorporated Household Sector – Spending is intermediate consumption • No such analysis has been done General Issues/Limitations • Systematic Errors – Sampling error of the survey itself • Coverage Errors/Uncertinities – goods and services purchased infrequently • Economy of Scale • Supply and Use tables What's new in Supply and Use Table • Independent estimates for change in stocks for 2004/05 • New level for household consumption – Estimates for around 52 different good and services – Commodity flow approach – around 5% higher than published one. – Adjustment for FISIM allocation Scheduled program • Follow up consumption survey • Exploring the VAT and government account detail • Separate treatment for • Infrequent Goods and services bought for final consumption by households • Payment to government units to obtain various kinds of licenses, permits, certificates, passports • Explicit and imputed service charges on household uses of financial intermediation services provided by banks, insurance companies, pension funds • Change in Stocks Thanks