The shift in GDP computation by the Central Statistics Office raises more questions than the solutions which it offers, the economic research department of the country’s largest lender SBI has said.
“The recent statistical exercise by the CSO raises more questions than it has resolved,” SBI’s chief economic advisor and general manager of the Economic Research Department Soumya Kanti Ghosh said in a note today.
The handsome growth in manufacturing (6.2 per cent in 2012-13 as against 1.1 per cent under the previous computation) does not map the sales growth, the note said.
Apart from that, he also finds problems with the CSO’s classification of ‘indirect taxes and subsidies’ as production taxes and production subsidies.
“These production taxes or subsidies are paid or received with relation to production and are independent of the volume of actual production. These may impart a bias to manufacturing growth,” he said.
Ghosh said the jump due to change in the way the GDP growth is computed, was at a low 2.2 percentage points in FY14 to 6.9 per cent, while in FY13, it rose to 60 bps to 5.5 per cent from 4.9 per cent, which is lower than the same observed when other countries have undergone revisions in the last 5-7 years.
On the positive side, the note said, the exercise is beneficial as it enables policy makers and analysts to obtain a more accurate set of economic statistics that is a truer reflection of current realities for evidence-based decision-making.
It also reveals a more accurate estimate of the size and structure of the economy by incorporating new economic activities which were not previously captured in the computational framework, he added.
The Reserve Bank was largely ambivalent on the changes which have been brought about, saying it will look through the revised and new data releases, and will look forward to the set of numbers to be released on February 9 for more clarity.