13.5 Government Final Consumption Expenditure

Brief Method of compiling estimates of GFCE

13.5.1 Final consumption expenditure of administrative departments is equivalent to the current expenditure on compensation of employees, purchase of non-durable goods and services net of sales and the CFC. By convention, expenditure on durable goods, which are used for defence, are also treated as part of consumption expenditure of the Government.

Sources of data used in the estimation of GFCE

13.5.2 The sources of data for administrative departments are the annual budget documents of the Central, State and Local Governments and finance accounts published by the Comptroller and Auditor General of India.

Sl. No.	Source of data	Method of estimation and its share in 1993-94
Government final consumption expenditure	Same sources as those used for the GDP estimates	Sum of compensation of employees, net purchase of goods and services and CFC (no provision is made in the budget documents for CFC of the Central/State Governments and local authorities. These are worked out from the estimated value of capital stock and the expected age of various types of assets at the aggregate level) The GFCE accounts for 11.4 % of GDP

Sl.
No.

Source
of data

Method
of estimation and its share in 1993-94

Government
final consumption expenditure

Same
sources as those used for the GDP estimates

Sum
of compensation of employees, net purchase of goods and services and CFC
(no provision is made in the budget documents for CFC of the
Central/State Governments and local authorities.
These are worked out from the estimated value of capital stock
and the expected age of various types of assets at the aggregate level)

The
GFCE accounts for 11.4 % of GDP

Data Gaps in the Estimation of GFCE
- 13.5.3 Current data are available for preparation of the estimates and accounts. However, problems exist in that, certain State Governments do not provide a detailed break up of expenditure under certain heads of accounts. In such cases, the norms as worked out on the basis of earlier data are used. In the case of local bodies data are generally not available on a regular basis. Only four States (Delhi, Meghalaya, U.P. and Maharashtra) carry out annually a complete analysis of the accounts of the local bodies, annually. For the States other than these, the estimates are currently based on grants available from the budget documents of the respective States as also information received on local bodies from the above-mentioned States. Collection of data from a large number of urban and rural bodies as also irregularity in finalisation of the annual accounts of these bodies are major problems for the State DESs. In case of non-response the States prepare the estimates and accounts by moving forward and/or updating the estimates and accounts of previous year(s) on the basis of grants received by such bodies from the Central/State Governments. Therefore, the major data gap in the estimation of GFCE is the data on local bodies.
- 13.5.4 Recommendations on estimation of Government Final Consumption Expenditure:
  - The major data gap in the estimation of Government Final Consumption Expenditure (GFCE) being with respect to local bodies, it is recommended that the State Directorates of Economic and Statistics (DES) should analyse the budgets of the local bodies every year for estimating all the National Accounts aggregates including GFCE.