Arun Jaitley, P Chidambaram spar over GDP revision
The Central Statistics Office (CSO) estimated that India’s GDP grew by 8.5 per cent in the financial year 2010-11 (April 2010 to March 2011) and not at 10.3 per cent as previously estimated.Updated: Nov 29, 2018 23:50 IST
Finance minister Arun Jaitley on Thursday sprang to the defence of revised data showing economic growth under the National Democratic Alliance (NDA) government had outpaced the rate of expansion during the previous United Progressive Alliance (UPA) regime after his predecessor P Chidambaram slammed the new numbers as “a joke, bad joke and worse than a bad joke.”
Meanwhile, Chidambaram’s challenge to NITI Aayog’s vice-chairman Rajiv Kumar to debate the amended data, which was released at a press conference on Wednesday by the federal policy think tank and the Central Statistics Office, was accepted by the latter.
“Data based on facts and on the best global practices is rejected by the (Congress) Party because it takes away the last of its surviving arguments (that) “my GDP growth was higher than yours,” Jaitley wrote in a Facebook blog titled ‘When The Data Speaks.’
Jaitley noted that Chidambaram had in 2015 welcomed changes effected in the way growth in gross domestic product, or the value of economic output, is calculated.
For the last two years of the Congress-led UPA regime, in 2012-13, and 2013-14, growth was revised upwards, from 4.7% to an eventual 5.5% and from 5% to 6.4%, respectively.
Chidambaram said then that the new data establishes the fact that UPA had succeeded in reviving the economy before it bowed out of power in 2014.
Data released on Wednesday, almost four years after India moved to a new way of calculating GDP, showed the compound annual growth rate in GDP at market prices (2011-12 series) under the Narendra Modi government was 7.3% between 2014-15 and 2017-18, higher than the 6.7% and 6.4% in the two terms of the UPA under Manmohan Singh. “ Obviously, when the new (GDP) series is in place, it has to be used as a basis for backward revision. So what was revised from the year 2011-12 onwards is now being revised from 2004-05.
Consequently, the same basis which improved the growth estimate in the last two years of the UPA Government somewhat downgraded it in the earlier years. Those who took after the new series in 2015 now consider the new series to be a “hatchet job” and a “bad joke”. What humours some when data shows an upward trend depresses them if it moves in the reverse direction,” Jaitley wrote. He defended the CSO, saying it had always functioned objectively and maintained an arms-length distance from the finance ministry.”No one in India has ever imputed motives to the CSO. The sooner the Congress Party realises that its policy paralysis pushed India into the Fragile 5, the better it will be for the Party and its leadership.”
Fragile Five is a term coined by Morgan Stanley for Brazil, India, Indonesia, South Africa, and Turkey in 2013, when their currencies depreciated rapidly.
Jaitley told reporters later that the new “data is realistic. It is not fictional. And this formula (of calculating GDP growth) is globally more comparable.”
Chidambaram, on Wednesday, accused NITI Aayog of doing a “hatchet job” by revising down the economic growth figures during the UPA’s two terms. “Now that Niti Aayog has done the hatchet job, it is time to wind up the utterly worthless body,” he said.
“I wonder if Niti Aayog Vice Chairman Rajiv Kumar will agree to a debate on the data than telling journalists that their questions are “undeserving of an answer,” Chidambaram tweeted.
Kumar responded to the challenge on Thursday. “...challenge accepted. Let’s discuss & dissect back series data. I gave 3 hrs of detailed interview yesterday & it is somewhat disingenuous of you to say that I asked the media to not ask questions. Do give more coherent reasons for ur difficulty with new data,” Kumar wrote in a tweet.
Through more tweets, Kumar also stressed that NITI Aayog uses data extensively for making logical policy recommendations and the data is always based on assessment and quality checks by eminent statisticians.
Kumar later told PTI that Niti Aayog had provided a platform to experts and statisticians to examine GDP back-series data.
“GDP back-series data is a technical thing, it has a huge macroeconomic impact, so we have done it in a more macroeconomic manner,” he said, adding that he was deeply pained by people who had politicised the data.
On comments made by the former finance minister, Kumar said: “Chidambaram has done a great disfavour to officers of the CSO. CSO officials have done an amazingly technically detailed exercise”.
Meanwhile, a Reuters polls showed India’s economic growth probably moderated to 7.4% in the July-September quarter, weakening just as the Bharatiya Janata Party gets set for general elections due next year. That pace is still faster than China’s, but a comedown from the more than two-year high of 8.2% set in the June quarter and some economists foresee the slowdown continuing though to the election at least.
“The economy is likely to slow down in the second half of the current fiscal year (ending in March),” A. Prasanna, chief economist at ICICI Securities Primary Dealership in Mumbai said. Prasanna was cautiously optimistic about the outlook, but much would depend on the election outcome. “Any signs of political uncertainty could affect market and business sentiment,” he said.
First Published: Nov 29, 2018 23:50 IST