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MoSPI proposes expenditure-side Gross State Domestic Product estimates for all States

By CAShorts DeskPublished Updated Source: MoSPI press note and draft guideline (9 October 2026); The Hans India

MoSPI proposes expenditure-side Gross State Domestic Product estimates for all States
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The National Statistics Office under the Ministry of Statistics and Programme Implementation on October 9, 2026 released a draft guideline for compiling Gross State Domestic Product (GSDP) by the expenditure approach, with base year 2022-23. No State or Union Territory currently estimates Private Final Consumption Expenditure. Stakeholders can send feedback until October 28, 2026.

Syllabus: GS3 · Indian Economy & Growth; GS2 · Federalism & Local Government; Prelims · Economy & Social Development

Why it matters

A State's finance department can see today which industries produced the State's income, but not who spent it. No State measures household consumption, so none can say how much of its economy rests on family spending, on government spending or on investment. If the proposal is adopted, each State would work out these demand-side numbers by one common method, and two States could be compared like for like. The second estimate would also act as a cross-check on the production-side figure. The larger issue is the quality of State statistics: the numbers that guide State budgets and plans are only as good as the data and methods behind them.

Prelims pointers

  • Gross State Domestic Product: value of goods and services produced within a State's economic territory; compiled by the State's Directorate of Economics and Statistics.
  • Three approaches to GDP: production (value added), income (factor incomes) and expenditure (final spending); in principle all three give the same total.
  • PFCE: final consumption spending of households and of non-profit institutions serving households (NPISH).
  • GFCE: general government spending on collective services such as defence and law and order, and individual services such as health and education.
  • GFCF: net acquisition of fixed assets used in production for over a year: dwellings, buildings, machinery, intellectual property products.
  • Valuables: precious metals and stones held as a store of value; counted in gross capital formation, not in consumption.
  • Household Consumption Expenditure Survey: conducted by the National Statistics Office under MoSPI.
  • PFMS: run by the Controller General of Accounts, Ministry of Finance. Vahan: the vehicle database of the Ministry of Road Transport and Highways.

Practise a UPSC-style question

With reference to the measurement of Gross State Domestic Product (GSDP), consider the following statements:

1. Under the production approach, GSDP is derived from Gross State Value Added by adding taxes less subsidies on products.

2. Under the expenditure approach, changes in inventories are counted as a part of final consumption expenditure.

Which of the statements given above is/are correct?

  1. (a) 1 only
  2. (b) 2 only
  3. (c) Both 1 and 2
  4. (d) Neither 1 nor 2
Show the answer

Answer: (a) 1 only

1 is correct: GSDP by the production approach is industry-wise Gross State Value Added plus taxes less subsidies on products. 2 is incorrect: changes in inventories are a part of gross capital formation, not of final consumption expenditure.

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