India’s logistics cost 7.8-8.9% of GDP, shows govt survey

India’s logistics cost for the fiscal year 2021-22 has been revealed to be in the range of 7.8-8.9% of the Gross Domestic Product (GDP), according to a government survey. This figure is notably lower than previous private survey estimates, which suggested a cost exceeding 10%.

Survey Overview

• The National Council of Applied Economic Research (NCAER) conducted the survey, tasked by the Department for Promotion of Industry and Internal Trade (DPIIT).
• The World Bank has reviewed the methodology, acknowledging its appropriateness as a baseline with potential for future refinement.

Calculating Logistics Cost

• The cost computation is based on secondary data sources, encompassing transportation, warehousing, storage, auxiliary support services, packaging, insurance, and other operational costs.
• DPIIT Secretary Rajesh Kumar Singh launched the report titled “Logistics Cost in India: Assessment and Long-Term Framework,” emphasizing its role in optimizing logistics efficiencies and bolstering India’s global competitiveness.

Long-Term Framework

• The report aims to establish a framework for credible logistics cost estimates, facilitating data-based planning and policymaking.
• Singh highlights India’s substantial investments in both physical and digital infrastructure, creating an enabling environment for acquiring reliable data.

Current Government Estimates

• The present government estimates suggest India’s logistics cost stands at 13-14% of GDP, indicating a notable variance from the survey results.

Global Context

• Globally, different methodologies exist for calculating logistics costs at the macroeconomic level.
• Previous estimates from sources like Armstrong and Associates (2017) and the Confederation of Indian Industry (2015) have shown varying figures, emphasizing the need for a standardized and reliable framework.

Important Questions Related to Exams

Q: What is India’s logistics cost as a percentage of GDP in FY22?

A: It is between 7.8-8.9%, according to a government survey, lower than earlier estimates exceeding 10%.

Q: Who conducted the survey and what is its significance?

A: The National Council of Applied Economic Research (NCAER) conducted it, endorsed by the World Bank. The report aims to optimize logistics and enhance India’s global competitiveness.

Q: How was the logistics cost calculated?

A: Based on secondary data sources, including transportation, warehousing, and other operational costs.

Q: What is the current government estimate for logistics cost?

A: It suggests 13-14% of GDP, showing a notable variance from the survey results.