Annual Survey of Industries (ASI): UPSC Insights

Description

Annual Survey of Industries (ASI)

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Context

The Ministry of Statistics and Programme Implementation (MoSPI) recently released the results of the Annual Survey of Industries (ASI) for the financial years 2020-21 and 2021-22.
This note contains key findings and trends observed during these periods.

Field Work Periods:

Field work for ASI 2020-21 was conducted from April 2022 to November 2022, while for ASI 2021-22, it took place from March 2023 to September 2023. Both periods were impacted by different waves of the COVID-19 pandemic.

Background:

ASI aims to provide insights into the dynamics of manufacturing industries, including output, employment, and capital formation. The results contribute to national accounts statistics and are prepared at both state and major industry levels.

Key Highlights:

GVA Growth:

GVA grew by 8.8% in 2020-21 due to a sharp fall in input, while it rose significantly by 26.6% in 2021-22, driven by industrial output growth of over 35%.

Sector Performance:

Industries like Basic metals, Pharmaceuticals, Motor vehicles, and Food Products were major contributors to GVA growth in 2021-22.

Employment:

Total employment in the sector rebounded in 2021-22, growing by 7.0% year-on-year and exceeding pre-pandemic levels.

State Rankings:

Gujarat led in GVA in 2020-21 and ranked second in 2021-22, while Maharashtra topped in 2021-22, followed by Tamil Nadu, Karnataka, and Uttar Pradesh.

Comparison Table:

The table compares key parameters from ASI 2017-18 to ASI 2021-22, showing trends in fixed capital, invested capital, employment, emoluments, input, output, GVA, depreciation, and net value added (NVA).

Table 1: Value of a few key parameters from ASI 2017-18 to 2021-22 in current prices

(Value figures are in Rupees Lakh)

Year	2017-18	2018-19	2019-20	2020-21	2021-22
Fixed Capital	328,588,927	346,606,975	364,135,165	369,438,562	372,635,444
Invested Capital	446,094,480	477,726,474	497,362,352	519,114,310	554,493,175
Total Persons Engaged (No.)	15,614,619	16,280,211	16,624,291	16,089,700	17,215,350
Total Emoluments	41,835,716	46,207,983	49,172,897	48,389,031	56,082,801
Input	660,520,215	774,377,980	749,755,617	719,206,541	987,917,996
Output	807,217,258	928,179,908	898,330,129	880,921,387	1,192,715,147
GVA	146,697,043	153,801,928	148,574,512	161,714,846	204,797,151
Depreciation	23,729,624	26,155,291	27,309,742	28,135,986	29,964,685
NVA	122,967,418	127,646,637	121,264,771	133,578,860	174,832,466

Endnote

ASI coverage includes factories under specified Acts, bidi and cigar manufacturing establishments, electricity undertakings, and units with 100 or more employees.
The sampling strategy combines census and sampling methods, and data are collected online.
Quality checks are conducted on collected data to ensure reliability.
By analyzing these findings and adhering to ASI methodologies, policymakers can better understand the performance of the manufacturing sector and formulate effective strategies for its growth and development.

GVA VS GDP

Aspect	Gross Value Added (GVA)	Gross Domestic Product (GDP)
Definition	Value generated by industries or sectors through production activities.	Total value of all goods and services produced within a country's borders during a specific period, regardless of ownership.
Calculation	Measures value added at each stage of production, excluding intermediate consumption.	Includes value added by industries, taxes on products, and subsidies received. Can be calculated using the production, income, or expenditure approach.
Focus	Captures sectoral contributions to the economy's overall output.	Provides a broad measure of a country's economic performance.
Scope	Can be calculated at both sectoral and national levels.	Typically calculated at the national level.
Policy Implications	Offers insights into sectoral performance and productivity.	Widely used for international comparisons and policy-making, serving as an indicator of economic health.
GVA Calculation	GVA calculates national income from the supply side by adding up value added across different sectors.	GVA of a sector is defined as the value of output minus the value of its intermediary inputs, shared among factors of production.
Sectoral Analysis	GVA growth helps understand sectoral robustness or struggles, and GDP is derived from GVA data.	Provides information from a consumer or demand standpoint.
Relationship with GDP	GDP = (GVA) + (Taxes earned by the government) — (Subsidies provided by the government). GDP data is more useful for annual economic growth and international comparisons.	GDP comprises five components: gross investment, government investment, private consumption, government spending, and net foreign trade (exports - imports).

PRACTICE QUESTION

Q. Which of the following statements regarding Gross Value Added (GVA) and Gross Domestic Product (GDP) are correct?

1.GVA measures the value generated by industries or sectors through production activities, while GDP represents the total value of all goods and services produced within a country's borders during a specific period.

2.GDP can be derived from GVA data by adding taxes earned by the government and subtracting subsidies provided, highlighting the demand side of the economy.

3.GVA is more useful for sectoral analysis and understanding productivity, while GDP provides insights into overall economic performance and international comparisons.

4.GDP is calculated by subtracting GVA from total government spending and net foreign trade, neglecting taxes and subsidies.

Options:

A) 1, 2, and 3 only.

B) 2, 3, and 4 only.

C) 1, 3, and 4 only.

D) All of the above.

Correct Answer: A) 1, 2, and 3 only.

Explanation:

This statement is correct. Gross Value Added (GVA) measures the value generated by industries or sectors through production activities, focusing on the value added at each stage of production. Gross Domestic Product (GDP), on the other hand, represents the total value of all goods and services produced within a country's borders during a specific period, irrespective of the ownership of the factors of production. Both GVA and GDP provide different perspectives on the economy's output.
This statement is correct. GDP can indeed be derived from GVA data by adding taxes earned by the government and subtracting subsidies provided. This adjustment is necessary to account for taxes on production and imports, as well as subsidies on products, which affect the overall value of goods and services produced within the economy. Therefore, this statement accurately highlights the demand side of the economy in GDP calculation.
This statement is correct. GVA is indeed more useful for sectoral analysis and understanding productivity, as it provides insights into the value added by individual industries or sectors. GVA allows for a detailed examination of sectoral contributions to the economy and helps in identifying areas of strength or weakness. On the other hand, GDP provides a broader measure of overall economic performance and is commonly used for international comparisons. Therefore, both GVA and GDP serve different purposes in economic analysis.
This statement is incorrect. GDP is not calculated by subtracting GVA from total government spending and net foreign trade. Instead, GDP is derived from GVA data by adding taxes earned by the government and subtracting subsidies provided, as mentioned in statement 2. Therefore, this statement misrepresents the calculation method of GDP and is incorrect.

In summary, statements 1, 2, and 3 accurately describe aspects of Gross Value Added (GVA) and Gross Domestic Product (GDP), making them the correct choices. Statement 4 is incorrect as it provides a misleading calculation method for GDP.