Growth figures questioned by ex-CEA
A suggestion by a former government insider that growth figures since 2011 may have been exaggerated has stirred heated debate within the government, which is trying to counter the claims made by its former chief economic adviser (CEA).
After Arvind Subramanian, the former CEA to Finance Minister Arun Jaitley during the tenure of the first Narendra Modi government, said that actual growth figures between 2011 and 2017 - a period that spanned the UPA 2 and the NDA1 governments - were closer to 4.5 per cent and not 7 per cent, various wings of the government have sprung to its defence and denied Subramanian's charges.
A panel of the prime minister's economic advisors pointed out that Subramanian admitted to being "unsure" of his conclusions about the country's growth figures being overestimated. It also said it would come up with a "point-to-point rebuttal" after a detailed examination of Subramanian's research paper on the subject.
It was not desirable to "sensationalize what should be a proper academic debate from the point of view of preserving the independence and quality of India's
statistical systems," said a statement from the prime minister's Economic Advisory Council.
"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 EAC statement read.
The statement follows a clarification from the Ministry of Statistics, which said estimates of the country's economic growth are based on "accepted procedures, methodologies and available data".
The Council argued that Subramanian, in his research, used "cross-country regressions" to estimate the GDP and said it was a "most unusual exercise".
"Using cross-country regressions to estimate GDP is a most unusual exercise, as is the suggestion that any country's GDP that is off the regression line must be questioned. The proxy indicators that he used can also be questioned. Nor does this exercise allow for GDP increases on the basis of productivity gains," the statement read.
"A country's GDP is in nominal terms and any exercise should be on the basis of nominal figures, not real growth rates," it added.
Subramanian, who returned to academia after being the CEA between 2014 and 2018, had said the changes did not originate from the politicians and were methodological -"the substantive work was done by technocrats, and largely under the UPA-2 government".
He has also suggested that the GDP estimation be revisited by an independent task force comprising national and international experts, statisticians, macroeconomists and policy users, arguing that "inaccurate statistics" on the state of the economy dampens the impetus for reform.