The new back-series GDP data estimate released by the ministry of statistics have stirred up a hornet's nest. A political as well as an academic debate has been triggerred by the two divergent views of Central Statistics Office (CSO) and National Statistical Commission (NSC) in the narration of India's growth story during the last decade.
The Central Statistics Office (CSO), an arm of the ministry of statistics, on Wednesday released the back-series GDP data using a new base year of 2011-12 instead of 2004-05. The data showed a drastic drop in growth during the UPA-1 and UPA-2 years (2005-06 to 2011-12). The official back-series data released by the CSO showed sharp contractions in growth rates, indicating that the GDP growth never surpassed 10 per cent during the UPA-1.
The new data showed an average reduction of 1.2 per cent growth throughout the regimes of UPA-1 and UPA-2. The average growth rate projected by the new data during the UPA-2 regime, between 2008-09 and 2012-13, was at 6 per cent. The average growth rate in the subsequent years under the present government stands at 7.12 per cent as per the new data.
However, academicians are quite sceptic about the new figures issued by the CSO. "Changing the base year is a routine exercise. It usually does not result in such a drastic reduction of growth numbers across all sectors," said Krishnan R., professor of economics at Indira Gandhi Institute of Development Research (IGIDR).
“The CSO has said that the earlier methodology was maintained for calculating the growth numbers, but it is quite doubtful as to what they did to achieve this depreciation in overall economic growth," he added.
It is learnt that a number of academicians from research and statistical institutes across the country are planning to approach the ministry of statistics to know the changes that were adopted for calculating the new back-series growth data.
However, the government had faced criticism earlier, as the ministry of statistics and programme implementation (MoSPI), under whom the chief statistician of India is appointed, has failed to make a new appointment to the post. The post has been lying vacant for over ten months after the retirement of the former chief statistician TCA Anant, in January.
In the absence of the chief statistician, the government had asked the NITI Aayog to release the data. NITI Aayog Vice Chairman Rajiv Kumar later clarified that the Aayog did not compute the data, but was only asked by the government to check the numbers arrived by the CSO.
Kumar, however, maintained that there had always been close links between the CSO and the Aayog. "We conducted two roundtables for the CSO to take valuable suggestions and feedbacks from our experts. Subsequently, the CSO requested NITI Aayog's participation in the release of the new number," said Kumar, who maintained that both are government bodies.
Finance Minister Arun Jaitley on Sunday said that UPA-1 rode on a wide-ranging reforms introduced by the previous NDA regime-led by Atal Bihari Vajpayee and favourable external conditions. He accused the Congress party of “indulging in fiscal profligacy, which finally proved its nemesis”. “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,” Jaitley said in his Facebook post.
However, the new back-series data released on Wednesday is in contrast to an August 2018 report by the Committee on Real Sector Statistics appointed by the National Statistical Commission (NSC), also under the MoSPI.
NSC data had put the GDP growth at 10.08 per cent in 2007-08 under the then Prime Minister Manmohan Singh, the highest since the liberalisation of the economy in 1991. In fact, it showed that under the UPA rule, the economy had hit the double-digit growth rate not just once but twice, in 2007-08 and 2010-11.
But the government withdrew the data first and then re-released them with a disclaimer that these are not final numbers and more reviews of these numbers would be done.
N.R. Bhanumurthy, professor at National Institute of Public Finance and Policy (NIPFP), who had chaired the sub-committee on linking new and old series GDP in NSC, said that the CSO had altered the methodology to include business performance data of 5,000 private companies under the ministry of corporate affairs, instead of the performance of 200 companies by the RBI.
Among other changes made, the government has also accounted less weightage to the services sector but laid more weightage on private manufacturing.
A nation’s GDP is always estimated following the UN System of National Accounts (UNSNA), which is a global template, that gets revised periodically to account for evolving economic activities. The government maintained that the growth computation has adhered to the UNSNA guidelines and has included more data.
But as the standard adage among statisticians goes, bigger data is not always better data. It is always the quality of the data that brings more accuracy. With the new back-series, one can only hope that the government is convinced by the academic argument to project a more transparent growth figure for India.
