GDP Growth: Former chief economic advisor Arvind Subramanian has said India s economic growth is overestimated by as much as 250 basis points between 2011 and 2017, contributing to a raging controversy over the authenticity of the GDP data that have already attracted scepticism since a new methodology was adopted for computing the national income in 2015.
Rather than expanding at about 7% a year in that period, growth was just about 4.5%, according to the research paper, published by the Center for International Development at Harvard University.
In a late-evening statement, the ministry of statistics and programme implementation sought to refute Subramanian s assertion and said it followed the right methodology. 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 modelling, MoSPI said. It added that the GDP growth projections brought out by various national and international agencies are broadly in line with the estimates released by MoSPI. The GDP estimates released by the Ministry are based on accepted procedures, methodologies and available data and objectively measure the contribution of various sectors in the economy, it stressed.
Subramanian has suggested an overestimation of India s GDP growth by MoSPI, primarily based on an analysis of indicators, like electricity consumption, two-wheeler sales, commercial vehicle sales etc using an econometric model and associated assumptions.
India must restore the reputational damage suffered to data generation in India across the board, from GDP to employment to government accounts,” Subramanian said. At the same time, the entire methodology and implementation for GDP estimation must be revisited by an independent task force.”
In its statement, MoSPI said the System of National Accounts 2008 is the latest version of the international statistical standard for the national accounts, adopted by the United Nations Statistical Commission (UNSC) in 2009 and is an update of the earlier 1993 SNA. The Inter-Secretariat Working Group on National Accounts (ISWGNA) was mandated to develop the 2008 SNA through intense discussions and consultation with member countries. India also participated in the deliberations of the Advisory Expert Group. In its adoption of the 2008 SNA the UNSC encouraged Member States, regional and sub-regional organizations to implement its recommendations and use it for the national and international reporting of national accounts statistics based on the available data sources, MoSPI said.
As with any international standard, the data requirements are immense and diverse economies like India take time to evolve the relevant data sources before they can be fully aligned with the SNA requirements, MoSPI said. In absence of data, alternate proxy sources or statistical surveys are used to estimate the contribution of various sectors to the GDP and gross value-added. The SNA also prescribes that the base year of the estimates may be revised at periodic intervals so that changes in the economic environment, advances in methodological research and the needs of users are appropriately captured.
India s economic growth touched a five-year low of 5.8% in the fourth quarter of FY19, as investment growth collapsed and a slowdown in consumption accentuated. With fourth straight quarter of slowdown, India lost the fastest-growing large economy status in Q4FY19, trailing China’s growth (6.4%) for the first time in nearly two years.