The Economic Advisory Council to the prime minister on Wednesday rejected former Chief Economic Advisor Arvind Subramanian’s claim that Gross Domestic Product numbers have been inflated, NDTV reported.
Subramanian had said on Tuesday that India’s economic growth was overestimated by 2.5% points per year between 2011-’12 and 2016-’17, a period when both the United Progressive Alliance and National Democratic Alliance governments were in power. The economist wrote in The Indian Express that official estimates pegged average annual growth during this period at about 7%, whereas actual growth may have been 4.5%.
The prime minister’s advisory body said Subramanian had made “strong claims”.
“It is worth noting that the base year of India’s income calculations shifted to 2011-’12 on the basis of recommendations of several committees with experts in National Income Accounting,” the council added. “It was on the basis of these recommendations, started in 2008, that the government implemented the change from January, 2015. Therefore, it is wrong to suggest that the views of experts have not been taken into account while changing the Base Year...”
The advisory body also claimed that a country’s Gross Domestic Product should be measured in nominal terms, not in terms of real growth rates. “The Economic Advisory Council will examine in detail the estimates made in Subramanian’s paper and come out with a point-by-point rebuttal in due course,” it added.
It also accused the former chief economic advisor of attempting to sensationalise the matter, and said this was undesirable “from the point of view of preserving the independence and quality of India’s statistical systems”.
“These are certainly issues that Dr Subramanian must certainly have raised while he was working as CEA, though by his own admission, he has taken time to understand India’s growth numbers and is still unsure,” the council added.
Subramanian had said inaccurate statistics on the economy “dampen the impetus for reform”, and restoring growth must be the current government’s key policy objective. “In reality, weak job growth and acute financial sector stress may have simply stemmed from modest GDP growth,” he had added. The same day, the Centre claimed Subramanian’s estimates were based on “accepted procedures, methodologies, and available data”.
In May, the government had announced that India’s growth rate had declined to 5.8% in the last quarter of the financial year 2018-’19. This was the slowest pace of growth in 17 quarters.