Gross Domestic Product etc - 31

Expenditure Method

3.11 The household consumption expenditure consists of expenditure by
the households (including non-profit institutions) on non-durable consumer
goods and services and all durable goods excepting land and building. The
coverage of the government consumption expenditure is the same except for
the fact that by convention, expenditure on durable goods which are used in
defence are also treated as part of consumption expenditure of the
government. The fixed capital formation consists of expenditure on the
acquisition of capital goods in the form of building, machinery and equipment,
transport equipment, etc. The stock accumulation is in the form of changes in
stock of raw materials, finished and semi-finished goods held by the
producing units including the government during the year. The two items
together i.e. fixed capital formation and change in stocks are termed Gross
Capital Formation. It will be noticed that all durable goods purchased by the
households other than land and buildings are considered as their
consumption expenditure but the expenditure on land and buildings is treated
as capital expenditure. Thus the motor vehicles purchased by households
(individual) are treated as consumption expenditure while the same if
purchased by the enterprises is treated as fixed capital formation.

3.12 The state and district income estimated by any of the above three
methods should in principle yield the same results.

3.13 However, given the data availability position, it is not possible to
compile SDP/DDP estimates by all the three approaches. The States follow a
combination of production and income approaches to compile the SDP/DDP
estimates. No attempt is made to compile the SDP/DDP estimates by
expenditure approach.[Reproduced from CSO Publication]