India’s GDP growth never crossed over into a ‘high-growth’ phase of above 9% in the last decade or more, new back series data from 2004-05 released by the government on Wednesday show. The data also show that India’s recovery from the global financial crisis took longer than previously thought.
The government, in 2015, changed the methodology and the base-year for the computation of its economic performance, moving towards a Gross Value Added (GVA) method from the earlier GDP calculations and bringing forward the base-year to 2011-12 from 2004-05. This, however, meant that the newer estimates could not be compared with the older data. The back-series release on Wednesday provides the growth estimates for previous years using the new methodology.
The new data release shows that GDP growth during the UPA years averaged 6.7% during both UPA-I and UPA-II. The old series had pegged these at about 8.1% and 7.46%, respectively. In comparison, the current government has witnessed an average GDP growth rate of 7.35% during the first four years of its term.
“The major takeaway from the data is that the economy doesn’t seem to have recovered from the global financial crisis as quickly as previously thought,” former Statistics Secretary and Chief Statistician of India TCA Anant told The Hindu. “That is something we should look much closer at.”
“There was a general point about the manner in which we did the old computations which was generally very insensitive to current data,” Mr. Anant added. “There were a number of ways in which the old series computations simply did not measure current changes quickly enough, which the new series in fact does.”
Further, he explained, sectors such as mining and manufacturing show that the impact of the financial crisis lingered.
“The other element is that the behaviour of the mining sector, which not only affected the mining sector but also trade segment, are elements in it,” Mr. Anant said. “Remember the de-coupling happened… there was a collapse in mining which happens more or less immediately post the financial crisis. We don’t see this in any of our data till 3-4 years later. The new series data captures that. The manufacturing sector shows growth falls off fairly quickly after a one-year boost after the crisis.” The new data shows that manufacturing sector growth plummeted to 4.7% in 2008-09 and then grew sharply to 11% in 2009-10. Thereafter, however, growth slowed to 3.1% within two years and remained below 6% till 2014-15. The mining sector, similarly, seemingly recovered from the contraction seen in 2008-09 for a couple of years, but then again plummeted to a contraction of 17.5% in 2011-12 and didn’t cross even 1% growth till 2014-15.
The new back series data diverges significantly from a draft report released by the National Statistical Commission earlier this year, which showed that growth during the UPA years crossed 9% on at least three occasions, and even hit 10.23% in 2007-08.
CSO’s credibility has been dented due to the manner of release: Pronab Sen, Former chief statistician of India
“The Statistical Commission numbers had problems with them,” former Chief Statistician of India Pronab Sen said. “The current method is robust to the extent that instead of doing this as a purely arithmetic exercise, they tried to relate the estimates to observed indicators. They have used the Annual Survey of Industries (ASI) data for manufacturing, the sales tax data for trade and so on.”
However, Mr. Sen also pointed towards how the manner in which the data has been released has dented the credibility of both the methodology used and of the Central Statistics Office.
“My concern comes out from the fact that this back series was essentially released by Niti Aayog, which is a political institution,” Mr. Sen said. “This has never happened. When a political institution releases national statistical data, it puts a huge question mark on the credibility of the data and the political independence of the statistical agencies. The credibility of CSO has been badly dented, not because of the data but because of the manner in which the release has been done.”
“The statistical methods on the face of it are fine,” he added. “The point is, it’s almost impossible to replicate what they have done. They will tell you which method was used for which sector, but there are several different methods you can use, so the question is what were the results given by the other methods and why did they apply this particular method to this specific sector.”
Calling it “voodoo economics” of Prime Minister Narendra Modi and Finance Minister Arun Jaitley duo, Congress' chief spokesperson Randeep Surjewala issued a statement alleging that the back series day has been manipulated.
“The entire GDP Back Series Data released today reflects the desperate attempt of a defeatist Modi Government to undermine India’s growth story over last 15 years. Modi government and its puppet Niti Aayog want the people to believe that 2+2= 8! Such is the gimmickry, jugglery, trickery and chicanery being sold as ‘back series data’,” he said.
“Niti Aayog’s revised GDP numbers are a joke. They are a bad joke. Actually they are worse than a bad joke. The numbers are the result of a hatchet job. Now that Niti Aayog has done the hatchet job, it is time to wind up the utterly worthless body,” former Finance Minister P. Chidambaram tweeted.