GDP back series data puts NDA back on top, trims UPA-era economy growth rates

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New Delhi | Updated: November 29, 2018 7:47:13 AM

Belying the notion that the United Progressive Alliance (UPA) fared better in economic growth than its successor, the data released by the Narendra Modi government on Wednesday trimmed the expansion rates for the UPA era, using a new methodology and base year (2011-12) that had been adopted to compute the national income. 

Rebasing growth: NDA back on top after GDP revision

Belying the notion that the United Progressive Alliance (UPA) fared better in economic growth than its successor, the data released by the Narendra Modi government on Wednesday trimmed the expansion rates for the UPA era, using a new methodology and base year (2011-12) that had been adopted to compute the national income.

The revised average annual growth rate for the nine years between 2005-06 and 2013-14 (all UPA years), now stands at just 6.7%, against 7.35% recorded in the first four years of the NDA. This could now stoke a political slugfest, especially because the Sudipto Mundle panel, whose rosier estimates of the UPA-era growth was junked by the current government, had pegged the average expansion between 2004-05 and 2013-13 at 8%. However, the revised (lower) numbers under the UPA could give the Modi government ammunition to puncture the notion that the new methodology helped the NDA to boost its numbers.

The latest data also showed that India hasn’t recorded double-digit growth in any year during either UPA or NDA regime. The revised estimate shaved off over one percentage point from the only year when India was believed to have posted double-digit GDP growth post-liberalisation (10.3% in FY11) and also from each of the other three years in the UPA period with 9%-plus expansion estimated under the old series.

Former chief statistician TCA Anant told a news channel that since mining output was linked to trade under the old series data (with 2004-05 base year), a boom in mining, followed by a bust (after FY11 when restrictions were imposed by several states) tended to exaggerate the picture of expansion earlier. This had to be corrected.

Read Also| GDP back series data cuts UPA era growth rates; here’s what former chief statisticians say 

Pronab Sen, former chairman of the National Statistical Commission, however, said a better picture of the economic performance of the country since the UPA era would emerge only after a proper study of the methodology used to deduce real growth in each segment of the economy. (CSO says different methodologies have been adopted for different sectors).

Sen also questioned the Niti Aayog’s unusual move to release the GDP data, saying it’s the prerogative of the Central Statistics Organisation (Niti Aayog vice chairman Rajiv Kumar along with chief statistician Pravin Srivastava released the back series data with 2011-12 as the base year). The think tank’s move, Sen felt, could set a bad precedent.

Asked about the growth rates for the UPA era estimated by the Mundle panel earlier this year, chief statistician Srivastava asserted that statistically, the new estimates better capture the country’s economic performance for earlier years.  The CSO estimated that India’s GDP grew 8.5% in 2010-11 and not at 10.3% as previously estimated. Also, the expansion of 9.3% each in 2005-06 and 2006-07 was lowered to 7.9% and 8.1% respectively, while 7.7% rate was now estimated for 2007-08 instead of 9.8%.The GDP growth rate for 2008-09 — which witnessed the global financial crisis — was lowered to 3.1% from 3.9% in the previous estimate.

The CSO said the nominal GDP in the old and new series for earlier years are largely moving in the same levels. The little divergence is on account of recalibration of the economy with the latest data sets. After using the new survey based estimates for the 2011-12 base, the corrected estimates of the nominal GDP were lower by about Rs 2.7 lakh crore in 2011-12 and Rs 0.56 lakh crore in 2004-05.

The share of the primary sector in total gross value added (GVA) is now higher for the 2005-11 period than estimated earlier primarily ((in the new series it ranges between 21.1% and 22.8% between FY05 and FY12, against 20.3-21.6% earlier) due to changes in the data sources. In the mining and quarrying sector, regular annual returns of public sector have been used instead of Indian Bureau of Mines data used earlier.

The share of secondary sector in total GVA, too, has increased in the back-series compared to the 2004-05 series. The increase is largely due to use of MCA data and public-sector data in the organised electricity and manufacturing sectors, which was earlier sourced from annual reports of private electricity companies registered with the Central Electricity Authority and Annual Survey of Industries respectively, said the CSO.

“It appears that the change in base year produced higher growth rate for the post-2011-12 period while depressing growth in the previous years. I have doubts about the consistency of the use of methodology. Maybe, MCA-21 data has not been used for the GDP back-series data for 2004-05 2010-11,” said a senior economist, on condition of anonymity, contrary to CSO claims.

The share of Tertiary Sector in overall GVA has reduced in the back-series compared to the 2004-05 series. This decrease is largely on account of the use of revised methodology and latest survey data sources of unorganised sector in the new base. In the 2004-05 base, the main data sources for unorganised sector were the NSS informal sector survey of 1999-2000 for the trade sector, unorganised enterprise survey results of NSS 63rd round (2006-07) for remaining non-financial service sectors and the Employment and Unemployment Survey (EUS) of NSS 61st round (2004-05). In the 2011-12 base, the main data source for the unorganised non-financial service sector has been the results of unorganised enterprise survey of NSS 67th round (2010-11) and the NSS 68th round (2011-12).

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