All About Advance Estimates

The advance estimates are estimates for the different sectors of the economy and broadly give an idea of how an economy is expected to perform in an upcoming financial year. The advance estimates are released by the Central Statistics Office (CSO) for different ministries. Among these estimates, advanced estimates agriculture and advanced estimates horticulture give an overview of the country’s expected agricultural and horticulture production. The following article gives detailed information about the concept of advanced estimates in the Indian economy, and explains their importance.

GDP

GDP, or the gross domestic product of a country, is a parameter to evaluate the strength of that particular country; the gross domestic product gives the total production happening within the borders of a nation. The GDP is a quantitative evaluation of an economy. Therefore, the GDP growth of a country can be predicted by understanding the production patterns in the economy. 

Advance estimates of certain economic sectors, such as agriculture, horticulture, industries, etc., give us details about the total estimated production in the respective sectors at the end of the 4th advance estimates — for example, advance estimates agriculture and advanced estimates horticulture.

Advance Estimates

• Advance estimates of GDP are released by the Central Statistics Office (CSO).

• The CSO forms this estimate by evaluating data from previous years and surveys conducted by different ministries.

• In simple terms, the advance estimates of different sectors, such as advanced estimates agriculture and advance estimate horticulture, give estimated production in the upcoming fiscal year from these sectors.

• These are called “advanced estimates” because the data are provided months before the end of the actual financial year.

• The ministries release four such reports, namely, 

1. 1st advance estimates (generally, at the beginning of January), 

2. 2nd advance estimates (generally, in the last week of February), 

3. 3rd advance estimates, 

4. 4th advance estimates.

Let us look into the data from the recent advanced estimates:

The First Advance Estimates

• The concept of advance estimates was introduced in the Indian economy in 2016-17 when the first advance estimate report was published by CSO.

• The intention behind introducing the first advance estimates was to incorporate e essential inputs for the budget exercise of the country.

• The estimate is made carefully by analysing the GDP forecast of the earlier financial year.

• The first estimate tells us how much the GDP is expected to grow in the following financial year.

• Usually, the first advance estimates are released soon after the third fiscal quarter (Q3), but it does not include the data from this quarter.

• The data from the third quarter (Q3) is covered under the second advance estimates, which are released in February.

• 1st advance estimates for the financial year 2021-2022 were estimated to grow at 9.2%, a significant increase from the earlier 7.3% for 2020-21.

The 2nd Advance Estimates

• The Central Statistics Office (CSO) releases the 2nd advance estimates in the last week of February.

• These estimates are released at the end of February, after the annual budget announcement.

• For the financial year 2021-22, the country’s GDP was estimated to increase by 8.9%; this was a significant increase from the previous year’s 6.6 estimations.

The 3rd Advance Estimates 

• The Central Statistics Office (CSO) released the third advance estimate for the Ministry of Agriculture and Farmers Welfare.

• The report includes the advance estimate agriculture details.

• The report also consists of the advance estimates horticulture produces.

• The estimates are compiled using information from different states and the union territories and data collected by different surveys.

• In the third advance estimate for the financial year 2020-21, the advance estimate horticulture was at 331.05 million tonnes; this was an increase of 3.3% from the previous estimations.

The 4th Advance Estimates

• The 4th advance estimates are released by the Central Statistics Office (CSO) for the Ministry of Agriculture and Farmers Welfare.

• The 4th advance estimates are the last instalment of quarterly advanced estimates before the end of a financial year.

• The 4th advance estimates give an advance estimate of agriculture crops in the fiscal year.

• In the 4th advance estimates of 2020-21, the agriculture production was 308.65 million tonnes; this was almost 11 tonnes higher than the previous estimations.

Importance of Advance Estimates

The following points reflect the importance of advance estimates,

• The advance estimates help the finance ministry decide on the allocation of the budget.

• The advance estimates give a broad picture of how the economy is expected to perform in the upcoming year.

• They also help in making policies and in decision making.

Conclusion

The advance estimates are an important budgetary tool in the economy; the first advance estimates were presented in the financial year 2016-2017. The advance estimates are released four times a year. These estimates range from advanced estimates for industries to advanced estimates agriculture and advanced estimates horticulture. The advance estimates help the finance ministry inform and allocate the financial budget; it also helps investors and producers to plan their economic activity throughout the year.