India’s economic growth numbers, adjusted for the base year of FY12, show that expansion was marginally higher under the new series after the economy picked up pace in FY04 and generally lower in the preceding years.
The numbers have been calculated by a committee set up by the National Statistical Commission. Former chief statistician Pronab Sen said the exercise was a good start but that more work was needed.
The report shows real GDP growth touching a high of 10.08% in 2006-07 in terms of factor cost, the highest since liberalisation of the economy in 1991 and the second highest ever, behind 10.2% during the Rajiv Gandhi administration in 1988-89. Under the old series, growth in 2006-07 was 9.57%.
In terms of market prices, the highest growth was 10.78% in 2010-11.
The new GDP series with FY12 as the base year was begun in 2015 and follows internationally accepted methods based on market prices as opposed to the factor cost method followed earlier and uses corporate numbers to estimate manufacturing output.
The committee has issued adjusted numbers for the 1994-2014 period. Average growth in first five-year term of the Congress-led United Progressive Alliance (UPA-1), FY05-09, goes up under the new series to 8.37% from 8.03% earlier in terms of market prices.
In terms of factor cost, the increase is from 8.43% to 8.87%. Average growth during the preceding Bharatiya Janata Party-led National Democratic Alliance administration is down marginally from 5.89% to 5.73%.
In terms of factor cost, the decline was from 6.01% to 5.83%. In the first three years of UPA-2 (FY10-12), the average growth rate goes up from 8.46% to 8.86%. In terms of factor cost, the revision is up from 8.06% to 8.49%. Growth data based on the old series is available till FY12 while the revised series is till FY14.
The Congress party said growth numbers were better under the UPA. “It proves that like-for-like, the economy under both UPA terms (10-year avg: 8.1%) outperformed the Modi Govt (avg 7.3%),” the party’s official handle tweeted. “The UPA also delivered the only instance of double-digit annual growth in modern Indian history.”
Over the 1994-95 to 2002-03 period, the restated growth under the new series is lower than GDP estimated according to market prices.
“Growth is higher in the new back series especially for value-added growth,” said Aditi Nayar, principal economist at ICRA. “There is a fairly secular trend after 2003-04.”
The committee said the deviations were not significant and attributed these to discrepancies.
“When we look at the growth rates, there are some differences, although not significant and this is largely due to the ‘discrepancy’ variable, which is found to be highly volatile,” it said.
Former chief statistician Pronab Sen said: “It is a good start but the committee has used some proxies to generate the series so one needs to see how consistent these methods are by themselves.”
The statistics office has not yet taken a call on the numbers. “These are indicative numbers to decide the approach,” said a statistics ministry official.
“These will be sent to the advisory committee on national accounts and based on its approval, we will work on sectoral data.”
Officials of Central Statistics Office were also involved in the recommendations made in the report. NR Bhanumurthy, professor at National Institute of Public Finance and Policy (NIPFP) and member of the committee, said the back series is consistent with the new series and would be helpful for research.
ONE METHOD The committee has restated the old series using one of the possible three ways--the production shift method. This is different from the method currently followed in compiling GDP data.
The committee recommended that the other two methods should be also used to calculate the back series and when these numbers become available then “the time series data based on all the three approaches should be compared for their robustness.”
The CSO has already computed the growth rates of GVA/GDP (gross value added/gross domestic product) estimates from 2004-05 to 2011-12 at current and constant prices using the current methodology. These are tentative estimates that need to be deliberated on by the advisory committee on national accounts, the committee noted in its report, and have not yet been presented.
Sourse: The Economic Times