EDITORIAL: Finally, the rebasing of GDP (Gross Domestic Product) and trade indices has been approved by Pakistan Bureau of Statistics’ (PBS’s) Governing Council. The GDP rebasing was due from 2015-16 as previous rebasing was done in 2005-6, and the usual practice is to revise it after every 10 years. The PBS along with provincial bureaus started working on it in the PML-N (Pakistan Muslim League-Nawaz) era and the efforts continued in the PTI’s (Pakistan Tehreek-e-Insaf’s) tenure. Weak technical capacity at the PBS was delaying completion of the rebasing exercise. The post of PBS Chief Statistician had remained vacant for as many as four years. An appointment finally happened in July 2021 and by January 2022 PBS issued the rebased national accounts based on 2015-16.
Rebasing of economic data at regular intervals of a decade or so is a standard practice that countries employ to ensure relevance of economic data by keeping pace with changes and variations in national economic activities. An economy undergoes changes with new sectors coming up and weights on existing sectors are required to be altered. In Pakistan, for instance, during the past 15 years, there are a number of modern services that have become part of the economy that previously had either no or little weight in the previous base. These include telecom and other technology-related services, modern retailing services including supermarkets, restaurants and beauty parlours. These are some examples where the weights must have increased. Then in manufacturing, under the previous base, many value-added sectors were missing. Such as the weightages for value-added textiles (garments), plastic products and packaging material were either zero or very low. Under the revised base weights of these sectors have been upgraded. The number of establishments covered in Census of Manufacturing Industries (CMI) has moved up by 5 times to 42,500 firms and out of it, PBS managed to extract quality response from nearly 24,000 firms — three times the number of firms that were covered under the previous base. The most notable inclusion in the revised base is that of garments that has been assigned the weight of 6.1 percent in the Large-Scale Manufacturing (LSM) sector. However, there is a flaw (or limitation) in the methodology as LSM reading for garments will be recorded based on export volumes, excluding domestic sales. The reason for this is that not many firms are willing to share data with the PBS.
With all the limitations, the rebasing is still a welcome move. This will give a relatively more accurate picture of the economy. As a consequence of this rebasing, the size of the GDP at market price has increased by 11 percent to Rs55.5 trillion ($346 billion) in 2020-21 and the per capita income to Rs266,614 or $1,666. The higher GDP at market price has also resulted in lowering the debt-to-GDP ratio to 72 percent and fiscal deficit to 6.1 percent in 2020-21. This shows the enhanced capacity of the economy to absorb debt and deficits. At the same time, a bleaker picture of taxes and exports is visible as well, which are down in terms of GDP to 9.5 percent and 7.3 percent, respectively. The government is showing its intent to rebase at 2022-23 after carrying out the population census in 2022. This is the way to go as it will give more time for the PBS to collect more relevant data. One hopes livestock survey would also be completed by then to give the right picture of the sector, which is more than half of agriculture sector.
Copyright Business Recorder, 2022