GDP estimates based on ‘accepted methodologies’, says Centre after ex-CEA says growth overestimated
Arvind Subramanian said the actual GDP growth between 2011-’12 and 2016-’17 may have been 4.5%, below the official estimates of 7%.
The Centre on Tuesday clarified that the Gross Domestic Product growth estimates are based on “accepted procedures, methodologies, and available data” after former Chief Economic Adviser Arvind Subramanian suggested that growth had been overestimated.
Subramanian wrote in The Indian Express that the actual GDP growth between 2011-’12 and 2016-’17 may have been 4.5%, below the official estimates of 7%, according to his new research paper published at Harvard University.
The Ministry of Statistics and Programme Implementation, in a statement, said Subramanian’s findings are based on an analysis of indicators, like electricity consumption, two-wheeler sales, commercial vehicle sales using an econometric model and associated assumptions.
“The estimation of GDP in any economy is a complex exercise where several measures and metrics are evolved to better measure the performance of the economy,” the ministry said in the statement. “With any base revision, as new and more regular data sources become available, it is important to note that a comparison of the old and new series are not amenable to simplistic macro-econometric modelling.”
The ministry noted that the GDP growth projections brought out by national and international agencies were broadly in line with the estimates it released.
The Ministry of Statistics said that with structural changes taking place in the economy, it was necessary to revise the base year of macroeconomic indicators like Gross Domestic Product, Index of Industrial Production and Consumer Price Index, periodically to ensure “indicators remain relevant and reflect the structural changes more realistically”.
“Such revisions not only use the latest data from censuses and surveys, but they also incorporate information from administrative data that have become more robust over time,” the statement said.
India had changed the base year for calculating GDP growth to 2011-’12 after the Narendra Modi government took over. In the absence of a back series, GDP data for the years before the new method was introduced was considered incomparable to that of the later years.
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