• Home
  • 13.8 United Nations System Of National Account

13.8 United Nations System of National Account

  • United Nations - System of National Accounts 1993
    • 13.8.1 The NAS are compiled by the CSO, following the recommendations and guidelines enunciated in the United Nations - System of National Accounts (UN-SNA), brought out by the United Nations for the purpose of standardisation of computations of NAS and comparability of these statistics across the countries. The CSO has been broadly following the UN-SNA, as revised from time to time. The Recommendations of the latest UN-SNA, 1993 (which was prepared under the auspices of the Inter-Secretariat Working Group on National Accounts comprising of the United Nations, International Monetary Fund (IMF), World Bank, Organisation for Economic Cooperation and Development (OECD) and the Commission of the European Communities-EUROSTAT) are also being incorporated to the extent permitted by the data system.
    • 13.8.2 The position of major recommendations of the 1993 UN-SNA, vis-à-vis, the Indian system of NAS, is given in the following table:
      Items
       

      UN-SNA
      1993 Recommendation

      		 Status
      of implementation in the Indian NAS, 1993-94 series
       
      (a)
      Production boundary
       

       

      Illegal
      activities to be accounted for
       

      Production
      of goods within households for own-consumption

      		These
      are not explicitly accounted for. However, for the unorganised sector,
      estimates are based on work force, (which are compiled from the results
      of household surveys on employment and unemployment) and hence illegal
      activities are accounted for indirectly. For agriculture sector,
      estimates are based on land-use statistics and, therefore illegal crops
      are covered indirectly, under 'area under other crops'. In the
      forestry sector, 10% of production of major forest products is assumed
      to be from illegal felling of trees. Firewood production is captured
      from the consumption estimates and hence accounts for illegal gathering
      of firewood. However, smuggling and other explicit illegal activities
      are not directly covered in the NAS.
       

      The
      agricultural production of the backyard/foreyard has been covered in the
      new series of NAS. As regards capturing production of other goods within
      the households, no information is available at present. Time-use survey has
      recently been conducted on a pilot
      basis, through which production of the UN-SNA activities within
      households could be estimated. The feasibility of such an exercise is
      being undertaken, though valuation of such production remains a problem
      area.
       

      (b)
      Assets Boundary

       

      Entire
      expenditure on mineral exploration to be treated as capital formation

      Implemented,
      with effect from 1993-94, during 1999, at the time of the revision of
      base year from 1980-81 to 1993-94.

      Expenditure
      on software

      Implemented,
      to the extent the information is reported separately by the enterprise.

      We
      have decided not to include the development of own-account software and
      databases, due to non-availability of data on such software and its
      valuation.

      Implemented,
      with effect from 1993-94 during 1999, at the time of the revision of
      base year from 1980-81 to 1993-94.

      Government 
      defence expenditure on fixed assets other than weapons and their
      means of delivery

      Only
      the dwellings for the military personnel are included

      Valuables
      like:  precious metals (non
      monetary gold if used as store of value) and stones, antiques and other
      art objects

      The
      recommendation is supported in principle but not feasible to implement
      on account of non-availability of data.

      Entertainment,
      literary or artistic originals

      Not
      implemented

      Charging
      CFC on Government fixed assets
      including roads and bridges and buildings

      Implemented,
      with effect from 1993-94 during 1999, at the
      time of the revision of base year from 1980-81 to 1993-94.

      (c)
      Institutional sector classification and accounts

       

       

      Sequence
      of accounts have to be compiled for five broad institutional sectors
      namely, non-financial corporations, financial corporations, general
      Government, households, non-profit institutions serving households and
      rest of the world

      Accounts
      are prepared only for the public sector (Administrative departments,
      departmental commercial undertakings and non-departmental commercial
      undertakings) which correspond to general Government and
      Government-owned part of non-financial and financial corporations
      according to UN- SNA 1993 and rest of the world. Accounts are not being
      compiled for Financial and Non Financial Private Corporate Sector.

       Production
      account

      Uses
      and resources of GDP by institutions /activity/IOTT

      Prepared
      for public sector and total economy; IOTT is also compiled roughly every
      5 years.

      Income
      and appropriation account

      Distribution
      of National income by institutions and its appropriation

      Income-outlay
      account of public sector only; National disposable income and its
      appropriation for the whole economy.

      Accumulation
      account

      Capital
      account, financial account, other changes in volume of assets account,
      revaluation account

      Capital
      finance account for the public sector and the whole economy, capital
      formation and saving

      Commodity
      flow and balances

      Supply-use
      table and IOTT

      IOTT
      - industry X commodity, once in 5 years

      Balance
      sheets

      To
      be compiled as part of integrated set of accounts

      Not
      compiled

      Natural
      resources accounts

      Recommended
      as satellite accounts

      Not
      compiled. Pilot studies were conducted by TERI and Govt. of 
      Goa. The studies are yet to be finalised.

      Social
      accounting matrix

      Recommended

      Only
      IOTT  is compiled

      Valuation

      Output
      and value added are to be valued at basic, producer's and
      purchaser's prices

      Estimates
      of value added are presented at factor cost and market prices.

      (d)
      Time of recording

      Crops

      Cultivated
      natural growth to be included in output as work in progress and gross
      fixed capital formation over the entire period of their growth process. 

      The
      existing NAS treatment is to include agriculture and forest products in
      output when harvested. in respect of all the crops. If the crop cycle is
      less than one year , then it will not make a difference in 
      the annual estimates of GDP

      Livestock

      Livestock
      raised for food are to be treated as work-in-progress until slaughtered.
      Furthermore, entries are to be recorded for own account production as
      the animal grows.

      This
      recommendation is not implemented in the NAS, the current treatment
      being to include livestock in production only when slaughtered or
      exported alive.

       Speculative
      constructions

      The
      speculative construction to be shown as part of inventories until the
      ownership has been transferred to the eventual user of the asset. 
      Hence it should not be treated as gross fixed capital formation
      until that time.  Output
      remains part of the work in progress of the institutional unit producing
      the asset until sold.  In
      this way, consistency will be maintained between the financing of the
      activity and the production. However, construction for own-use or work
      completed under contract of sale is to be included as gross fixed
      capital formation as the work is put in place. 

      The
      treatment suggested for own-account construction is being followed for
      all building and construction activity, including speculative
      constructions.

      Transactions

      All
      transactions to be recorded on an accrual basis in order to reflect the
      time when the transactions occurred rather than when it may be paid for.

       

      In
      the NAS, transactions are recorded in the mixed way, in that the
      accounts of the companies are kept on accrual basis whereas the
      Government transactions are on cash basis. 
      The extent to which accrual accounting can be implemented more
      widely for the general Government sector in the NAS will depend on the
      progress made by the Central and State Government bodies in introducing
      accrual accounting in their own public accounts.

      Classification
      of expenditures

      Classifications
      of functions of Government (COFOG), individual consumption by purpose
      (COICOP), producers by purpose (COPP) and non-profit institutions by
      purpose (COPNI) to be compiled.

      COFOG
      and COICOP are prepared in the 1968 framework and details are available
      to compile in the new framework. COPP and COPNI are not compiled in the
      NAS.

      (e)
      Others

      Output
      of insurance

      Premium
      supplement to be included in the output of insurance

      Implemented,
      during 1999, at the time of the revision of base year from 1980-81 to
      1993-94.

      FISIM

      Distribution
      to industry and final users

      Followed

      Mixed
      income

      The
      return to labour and capital for unincorporated enterprises owned by
      households to be termed as 'mixed income'.

      Implemented
      with effect from 1993-94, during 1999, at the
      time of the revision of base year from 1980-81 to 1993-94.

      Statistical
      discrepancy

      No
      statistical discrepancy; emphasis on classification, simplification and
      harmonisation

      Statistical
      discrepancy is recorded

      Estimates
      at constant prices

      For
      full system of National accounts

      Major
      aggregates only.  Disposable
      income and saving are prepared only at current prices

      Chain
      volume measures

      Constant
      price estimates are also to be prepared by chain volume measures

      No
      chain linking is done. The estimates are available at fixed base year
      (current base 1993-94)

    • Implementation of UN-SNA 1993
      • 13.8.3 To help monitor the progress of implementation of UN-SNA 1993by member countries, the Inter Secretariat Working Group on National Accounts (ISWGNA), which the UN has set up for this purpose has developed a set of phases/milestones, indicated below. These milestones form the roadmap to the member countries in their efforts to implement the UN- SNA 1993.
      • Table 13.14: Milestones in the Implementation of UN-SNA 1993

        Phases

         

        Milestones
        Pre
        UN-SNA 1993

        Basic
        data on prices trade production, etc.

        Phase-1

        GDP
        by industry and expenditure at current and constant prices

        Phase-2

        Phase-1
        plus

        External
        transactions with the rest of the world including macro indicators such
        as GNI (GNP), National disposable income, etc.

        Phase-3

        Phase-2
        plus

        Production
        accounts of all institutional sectors and integrated accounts of general
        Government until financial accounts

        Phase-4

         

        Phase-3
        plus

        Integrated
        accounts of all other institutional sectors until capital accounts

        Phase-5

         

        Phase-4
        plus

        All
        financial accounts of all institutional sectors

        Phase-6

         

        Phase-5
        plus

        Other
        changes in assets accounts of all institutional sectors and balance
        sheets for all institutional sectors
      • 13.8.4 India is in phase-3 as at present, as the accounts for Government and the total economy, as well as for the public sector segment of non-financial and financial corporations are compiled regularly.
    • GDP Estimates by Industry with reference to UN-SNA 1993
      • 13.8.5 The features of UN-SNA 1993, which are incorporated into the NAS are (a) imputed value of own-account labour treated as mixed income of self-employed, (b) allocation of Financial Intermediary Services Indirectly Measured (FISIM) to the users of these services, and (c) valuation of non-market agricultural crops and ownership of dwellings on the basis of price of similar product made by market producers.
      • 13.8.6 Recommendations on Extended Production Boundary with reference to United Nations - System of National Accounts 1993 (UN-SNA 1993)
        • For covering the production of goods within households for own consumption, the NSS consumer expenditure surveys need to account for these separately. Production of services by the households for their own consumption is not to be covered in the Gross Domestic Product GDP estimates. However, output of services produced with the help of domestic servants, who are members of households need to be accounted in the GDP estimates. This might be quite difficult to capture separately in the present statistical system. The valuation of such services may be imputed on the basis of the value of output of domestic servants, who are own-account enterprises in their own right.
        • Regarding concealed and underground production, many activities are covered implicitly, through the various approaches followed in the estimation of Gross Domestic Product (GDP). For example, in the case of agriculture, illegal crops are implicitly covered under the miscellaneous category “area under other crops”; in the case of firewood, the production estimates are made through consumption approach; in the case of construction, through commodity flow approach; and in the case of unorganised sectors, through the employment approach. The indirect approach of estimation currently followed may be continued, as direct survey of concealed and underground production is not possible.
    • Saving and Capital Formation with reference to UN- SNA 1993
      • 13.8.7 The UN-SNA 1993 has expanded the coverage of asset boundary to cover new items like cultivated assets, mineral exploration, computer software, entertainment and literacy or artistic originals, associated cost of capital assets transfer from one hand to another and defence expenditure on capital equipment, which are usable for civilian purposes. The UN-SNA1993 also includes as capital formation, the expenditures on produced assets that are not used primarily for production or consumption, but acquired and held as stores of value. Examples of valuables are precious metals (non monetary gold if used as store of value) and stones, antiques and other art objects. Besides the expanded coverage of asset boundary, the UN-SNA1993 also recommends compilation of sequence of accounts (which includes accumulation accounts) for five institutional sectors of general Government, financial corporations, non-financial corporations, NPISHs and households.
      • 13.8.8 The features of UN-SNA1993, which have been incorporated into the NAS are (a) expenditures on mineral exploration as capital expenditure irrespective of the outcome of the explorations, and (b) estimation of consumption of fixed capital of all fixed assets including Government buildings, roads, dams, etc. as per perpetual inventory method (PIM).
      • 13.8.9 As per UN- SNA1993, annual accrued interest on the Bonds should be taken instead of lump sum payments to the household at the time of maturity. All new financial instruments such as warrants, futures, swaps, etc. would need to be taken into account in the estimation of saving by the RBI as and when such data become available.
    • Capital Formation
      • 13.8.10 Detailed information on capital formation (new items) like computer software, entertainment and literacy or artistic originals are not available. But in the UN-SNA1993, these need to be treated as capital formation. In addition, information required under UN-SNA1993and is also not available relates to associated cost of capital assets transfer from one hand to another for the household, defence expenditure on capital equipment such as on radar, satellite launching systems, vehicles and on construction of buildings for office, hospitals and schools, etc. and on other construction works like roads, airfields and docks, etc. which are usable for civilian purposes. Similarly, information on valuables is also not available.
      • 13.8.11 For presenting the capital formation estimates at further dissaggregated level, as recommended in UN-SNA1993, break-up of household capital formation separately is required for (a) households (b) Non-Profit Institutions serving households (NPISH), (c) NPIs financed by financial corporations and (d) NPIs financed by non-financial corporations.
      • 13.8.12 Recommendation on saving and Capital Formation with reference to UN-SNA 1993.
        • Type studies may be conducted on extended asset boundary to capture the necessary data like Cost of transfer of capital assets from one unit to the other unit; copyrights/ patents, film originals, books and artistic originals; Defence expenditure on capital assets like vehicles, construction of buildings for office, hospitals, schools, roads, airfields, etc., which could be used for civilian purposes; Expenditure on purchase of software, databases, etc.; and, information on valuables like: precious metals (non monetary gold if used as store of value) and stones, antiques and other art objects.
        • UN-SNA 1993 recommends that trees, which are repeatedly used to produce valuable goods, are to be taken as cultivated assets. It is recommended that the item, trees which are used repeatedly or continuously to produce product, such as fruits and rubber, be treated as capital formation.
        • The originals of films/books/research/artistic work, identified by copy rights/patents, need to be taken as a part of capital formation. The research and development expenditure should not be capitalised, when research succeeds, it results in new copy rights/patents which in turn get included in capital assets.
        • Defence expenditure on capital equipment such as radar, satellite launching system and vehicles, construction of buildings for offices, hospitals and schools, etc. and other construction works like roads, air fields, docks which are useable for civilian purposes, should be considered as part of gross capital formation as per UN-SNA 1993.
    • Institutional Sector Accounts, and Sequence of Accounts
      • 13.8.13 The current data gaps are the absence of accounts in respect of, non-financial corporations, households and non-profit institutions serving households. It is therefore recommended that:
        • Efforts should be made to develop suitable frames for non-financial corporations, households and non-profit institutions serving households and collect information on regular basis on their income and expenditures.
        • With regard to extended production and asset boundaries, as and when new estimates are introduced for extended production and extended assets (in relation to the existing boundaries in UN-SNA 1968), they be indicated in separate rows and not merged with the estimates in order to maintain UN-SNA1968 consistent boundaries, so as to maintain inter-temporal comparability of National Accounts aggregates.
Download Reports
Download Reports
Back to Top