The GDP debate: Fact for the government, fiction for opposition
The involvement of NITI Aayog in releasing the GDP figures, hitherto the CSO’s sole prerogative, further muddied waters.Updated: Dec 27, 2018 11:22 IST
This has been a year when debate about past growth performance overshadowed concerns about present growth rates in the Indian economy. In 2015, the Central Statistical Office (CSO) released a new gross domestic product (GDP) series with 2011-12 as the base year. Because the CSO did not release a full back series and the old series figures were not available anymore, long-term growth comparisons became impossible. The CSO released a partial back series – it ends at 2004-05 – in November this year.
The new numbers were counter-intuitive. They disputed the widely held belief that the Indian economy experienced its best boom phase under the United Progressive Alliance (UPA) government before the 2008 global financial crisis killed the momentum. They also showed that India’s best economic run came under the present government. Compound annual growth rate (CAGR) of GDP at market prices (2011-12 series) was 7.3% between 2014-15 and 2017-18, higher than the 6.7% and 6.4% between 2004-05 and 2009-10 (UPA I) and between 2009-10 and 2013-14 (UPA II).
These findings were in sharp contrast with those of a committee set up by the National Statistical Commission, which projected the growth under UPA era to be even higher than what was shown in the old GDP series.
The CSO findings kicked up a storm in both political and economic circles. The Congress accused the government of fudging statistics. Economists raised questions about consistency of methodology and the figures not being in sync with other indicators of economic activity. The involvement of NITI Aayog in releasing the GDP figures, hitherto the CSO’s sole prerogative, further muddied waters. Even Arvind Subramanian, the government’s former chief economic advisor, spoke against NITI Aayog’s involvement in a subtle way. To be sure, finance minister Arun Jaitley rightly pointed out that the opposition has been guilty of selectively agreeing and disagreeing with the new GDP numbers. While Jaitley highlighted an important flaw in the arguments made by critics of the new series GDP numbers, it is unlikely to settle the debate on veracity of the statistics.
First Published: Dec 27, 2018 11:16 IST