Government defends official growth data, says followed global practices

Arvind Subramanian

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However, the ministry said: "Estimation of GDP in any economy is a complex exercise where several measures and metrics are evolved to better measure the performance of the economy".

The new series of national accounts with base year 2011-12 was formulated in 2015, and is now used to compute quarterly and annual GDP, and its methodology has been under scrutiny from economists and statisticians since then.

"With any Base Revision, as new and more regular data sources become available, it is important to note that a comparison of the old and new series are not amenable to simplistic macro-econometric modeling".

"In India, the Base Year of the GDP series was revised from 2004-05 to 2011-12 and released on 30 January, 2015 after adaptation of the sources and methods in line with the SNA 2008", the ministry said in its rebuttal.

India's former chief statistician Dr Pronab Sen Tuesday dismissed latest research that showed overestimation of India's GDP data, saying that it studies only one aspect of growth (volume) and not the other two aspects, namely productivity and quality. "But this would also mean that the older series underestimated growth in the years prior to 2011-12", he added, since it was more robustly based on volume indicators.

It supported its claim by saying that the GDP growth projections brought out by various national and global agencies are broadly in line with the estimates released by MoSPI and objectively measure the contribution of various sectors in the economy.

As the controversy over the country's economic growth under the new GDP series mounts, Subramanian in his recent research paper published at Harvard University pegged actual GDP growth at around 4.5 per cent, as against the official estimates of almost 7 per cent growth during the said period.

Official estimates place average annual growth for this period at about 7%.

Mr Subramanian, who returned to academia after being the Chief Economic Adviser between 2014 and 2018, had said the changes did not originate from the politicians and were methodological - "the substantive work was done by technocrats, and largely under the UPA-2 government".

The apparent puzzle of ongoing and intensifying corporate and financial system stress, weak new project announcements, and persistently low capacity utilisation in manufacturing point towards overestimation of GDP growth, he said.

In 2016-17, when two major structural reforms were introduced - GST and demonetisation - in the Economic Survey, he stated: "Against the backdrop of robust macro-economic stability, the year was marked by two major domestic policy developments, the passage of the Constitutional amendment, paving the way for implementing the transformational Goods and Services Tax (GST), and the action to demonetise the two highest denomination notes".

The PMEAC has pointed out flaws in the manner in which Subramanian used "cross country regressions to estimate what India's GDP should be". The revision in the methodology happened during the first term of the Modi government. Using this, in August a year ago the growth numbers were recalibrated by the Sudipto Mundle Committee set up by the National Statistical Commission. And the base year was shifted to 2011/12 from 2004/05 earlier. The government, however, dumped this calling the numbers experimental and not actual.

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