After former Chief Economic Advisor Arvind Subramanian’s research paper re-started debate on GDP data, comments from other prominent economists have also started to pour in on the issue.
After former Chief Economic Advisor Arvind Subramanian’s research paper re-started debate on GDP data, comments from other prominent economists have also started to pour in on the issue. While some support the analysis and call for an independent committee to examine the data, others raise questions over the calculations. P C Mohanan, former acting Chairman of the National Statistical Commission and R Nagaraj, a professor at Indira Gandhi Institute of Development Research, asked for the review of the entire GDP revision process.
However, Pronab Sen, former Chief Statistician, said that the volume indices that were being used before the new methodology was adopted don’t take into account productivity and value addition. It is likely that a 7 per cent GDP growth rate is because of 4.5 per cent volume growth and the remaining 2.5 per cent owing to productivity, and this in no way makes it an overestimation, he also said.
The research is mainly based on an analysis of indicators such as electricity consumption, two-wheeler sales, etc. and associated assumptions, said MoSPI. In absence of any revision of base in view of fresh data source becoming available, the comparison of the old and new GDP series is “not amenable to simplistic macro-econometric modelling”, it added.
Arvind Virmani, a former CEA, tweeted:
1/m Everybody is now a Statistical expert, except high level Statistical Commission, the committee of outside experts which supervised the GDP rebasing, and the Statistical Department which calculated the new series(all #MMS appointees): https://t.co/a5xdGqvt5E
— Dr Arvind Virmani (@dravirmani) June 11, 2019
Noted economist Surjit Bhalla said:
1/n Glad that @arvindsubraman (AS) has re-opened the GDP debate with a very sound analysis; both @dravirmani and I have been working on this subject (individually & jointly) for the last decade+; AS contends that India GDP growth (fiscal years) averaged 7.5 % between 2001-2011 https://t.co/6iBlENtZya
— Surjit Bhalla (@surjitbhalla) June 11, 2019
Arvind Subramanian’s research paper
The former Chief Economic Advisor Arvind Subramanian, in his latest research paper published at Harvard University, had concluded that India’s GDP growth rate has been overestimated under both UPA and NDA rule. The overestimation is of about 2.5 per cent and the actual growth may be lower, at nearly 4.5 per cent, down from 7 per cent between 2011-12 and 2016-17, he had said. The conclusion is based on an analysis of 17 key economic indicators that are highly correlated with the GDP growth.
This also took a political turn with Congress party tweeting:
Former Chief Economic Advisor, Arvind Subramanian, finds that the govt’s new formula to calculate GDP is completely baseless. In the first few years of BJP rule the GDP was closer to 4.5% rather than 7% as the govt. has been claiming. https://t.co/vBB59DyS90
— Congress (@INCIndia) June 11, 2019