MPs grill stats office on GDP

Data has been overestimated post note ban, say experts

A Parliamentary standing committee on finance has asked Central Statistics Office (CSO) to explain as to how it estimated the economy to grow at 7.1 per cent in fiscal 2016-17 despite the demand contraction caused by demonetisation.

“The committee would also like to be apprised about the rationale/process/assumptions made and adopted by the CSO in their recent GDP advance estimates for 2016-17, which has been considered by independent experts as a possible overestimation, particularly in the backdrop of demonetisation,” said the committee in its report submitted in the Parliament.

The Standing Committee on Finance also pointed out that several experts have expressed the possibility of overestimation of GDP for 2016-17 in the wake of demonetisation.

The committee has also referred to reports of economists predicting a fall in the economic growth due to the demonetisation of old currency notes. Apart from RBI, other agencies like IMF and OECD had lowered GDP projections arguing that the note ban would have short-term impact on the economy.

The Parliamentary standing committee on finance headed by Dr M. Veerappa Moily has sought an explanation from CSO over its GDP estimate for 2016-17 which it said is considered by experts “over-estimation” in view of demonetisation.

Central Statistics Office (CSO) in its advance estimate has pegged GDP growth for 2016-17 at 7.1 per cent and it kept unchanged while announcing Q3 growth figures.

Last month CSO had said that despite demonetisation, India’s GDP grew by 7 per cent between October to December 2016 (Q3 201617) to retain the title of the world’s fastest-growing major economy.

“The committee would also like to be apprised about the rationale/process/assumptions made and adopted by the CSO in their recent GDP advance estimates for 2016-17, which has been considered by independent experts as a possible over-estimation, particularly in the backdrop of demonetisation,” said the committee in its 7% growth in GDP was recorded in Q3 FY17 despite note ban, according to CSO thus helping India to retain the title of the world’s fastestgrowing major economy report submitted in the Parliament.

Many experts had warned that demonetisation of old currency of `500 and `1,000 on November 8 will hit the economy. The Reserve Bank of India and other agencies like IMF and OECD had lowered GDP projections arguing that the note ban would have short-term impact on the Indian economy.

The committee also raised question over CSO methodology from 2015 for computing GDP data.

In its report the committee noted that in January 2015, CSO introduced the new series of national accounts statistics with base year 201112 replacing the previous series with base year 2004-05.

The committee said that the new series of national accounts with 2011-12 as the base year has raised more questions than answers.

“The GDP data does not seem to reflect the momentum of economic activities across the spectrum. It, is therefore, imperative that a more realistic computation method be adopted with a view to enhancing the credibility of official statistics,” said the report.

7.1% was the advance GDP estimate for FY17. The CSO kept its estimate unchanged while announcing the Q3 growth figures The committee would also like to be apprised about the rationale/ process/assumptions made and adopted by the CSO in their recent GDP advance estimates for 2016-17, which has been considered by independent experts as a possible overestimation, particularly in the backdrop of demonetisation — PARLIAMENTARY STANDING COMMITTEE ON FINANCE