The Curious Case of GDP Growth
The Central Statistics Office (CSO), the custodian of Indian statistics, has faced a lot of questioning after the release of the new GDP series with 2011-12 as base. The RBI, Ministry of Finance, IMF, several credit rating agencies have all questioned the validity of the revisions. Some analysts like Ruchir Sharma of Morgan Stanley have gone as far as to assert that these revisions if not corrected will make Indian statics as suspect as Chinese GDP data in the past. This will be a real pity. The extent of the revisions is shown in Table 1 below. With the new base year of 2012-13, GDP growth in FY 14 (2013-14) has been revised upwards to 6.6% at factor cost and a whopping 6.9% at market prices. This represents about 2% increase in GDP growth over the earlier estimate of 5%. Surely, such a large scale revision will or should significantly affect the understanding of the underlying economic phenomenon and lead to a marked policy shift. Contrary to what Surjit S Bhalla (SSB) would have us believe, not even the government is taking the revised estimates seriously enough as reflected in a lack of any change in policy direction.