India’s GDP growth overestimated by 2.5% during 2011-2017: Former CEA Arvind Subramanian
India’s statistics may have been painting a far rosier picture of economic growth than the more modest reality of the past decade. The nation has held the crown of the world’s fastest-growing major economy until recently, but a new study by former Chief Economic Adviser Arvind Subramanian says the expansion was overestimated between 2011 and 2017. Rather than growing at about 7% a year in that period, growth was about 4.5%, according to the research paper, published by the Center for International Development at Harvard University.
The overestimation occurred after the previous Congress-led government changed the methodology in calculating gross domestic product in 2012. One of the key adjustments was a shift to financial accounts-based data compiled by the Ministry of Corporate Affairs, from volume-based data previously. This made GDP estimates more sensitive to price changes, in a period of lower oil prices, according to the research paper. Rather than deflate input values by input prices, the new methodology deflated these values by output prices, which could have overstated manufacturing growth.…
The latest study throws more doubt over India’s economic statistics. A growing number of critics have questioned India’s high growth estimates under Prime Minister Narendra Modi’s government. A delayed jobs report was mired in controversy earlier this year, two statistics officials quit after raising concerns about the data, and a group of 108 economists from around the world questioned whether politicians were trying to influence the figures. … The most recent data shows India’s growth slowed to a five-year low in the first three months of the year.
- India’s GDP growth: New evidence for fresh beginnings (Jun 12, 2019, Indian Express)
- Arvind Subramanian’s research paper on India’s GDP has Indian economists honking like startled geese (Jun 13, 2019, The Telegraph)
- India’s economy is in crisis after reduced GDP estimate Jun 14, 2019, Economic Times)
- Official Figures Confirm Slowdown (Jun 9, 2019, Peoples Democracy)