New Delhi: A detailed analysis of the back series of GDP numbers based on the new base year of 2011-12 was released last week.
The new data is a set of calculations to show what the economic growth was during previous years, calculated using the new base year, which was changed by the Modi government in 2015.
The new data has been presented by a government-appointed panel and is yet to be confirmed by the government. But no one is waiting for the government’s approval – intense political sniping has already begun.
Did the UPA government lead India to double digit economic growth, higher than previously estimated, and does the present NDA’s record look poorer in comparison? This question seemed to agitate many economists and experts over the weekend, after the new data showed higher growth under some years of UPA rule than previously calculated.
The panel’s report showed that growth during UPA-I crossed the 10% mark; in 2006-07 growth was 9.57% under the old method (when a different base year was used) but jumped to 10.08% under the new method. Growth in all of the UPA’s 10 years has been higher according to the new set of calculations.
The Congress began the sniping, with P Chidambaram Finance Minister for much of the UPA government’s tenure, tweeting on Sunday that “a lot of confusion was sown and the Modi government added to the confusion by changing the base year from 2004-05 to 2011-12….the back series data is now available. The numbers prove the dictum that truth cannot be suppressed forever and truth has a way of emerging amidst a torrent of lies and distortions”.
He went on to say that the decade-long UPA government (2004-2014) delivered the best economic growth since Independence; and that the Modi government lost the growth momentum it received from the UPA due to demonetization, GST and “tax terrorism”.
Arun Jaitley, who has been the Finance Minister for much of the NDA government’s tenure, hit back with a blog post, saying
“2003-04 witnessed the boom period for the global economy. The result was that global growth picked up. Most economies were doing well and all emerging economies started showing a high growth rate. This period continued till 2008 when the global crisis started. For India to grow at a high rate during 2003-08 was quite obvious”.
He also mentioned that the Current Account Balance was positive under NDA 1 but negative under UPA 1; and that inflation spiked to double digits under UPA.
While both sides of the political divide have their stories nicely padded up, there is little reason for politics to overtake reason as far as the back series and growth estimates are concerned.
Madan Sabnavis, Chief Economist at Care Ratings, pointed out that “back series data released by the panel has been more or less on expected lines. Growth rate became higher for 2012-13 and 2013-14 also when the new methodology was used”. The fuss over the numbers is anyway a little over-the-top.
One, the very idea of lauding one set of numbers based on the criterion while doubting a different set of numbers based on the same criterion smacks of hypocrisy. When the Modi government changed the base year for calculating Gross Domestic Product (GDP) from 2004-05 to 2011-12 in 2015, the same lot of economists and commentators had cried foul, saying the government just wanted to dress up the figures to show growth under the present regime was on a higher trajectory.
Now, when the same new base year has projected growth under the UPA-I regime to be higher than previously thought, the same people are lapping up government data. Either it was credible in both instances or in neither – one can’t have one’s cake and eat it too.
Two, the architect of the report which has led to such intense debate on the state of the Indian economy is himself saying that that his panel has merely “spliced” the series constructed by the government to calculate GDP, the panel did not collect data on its own.
In this piece, Sudipto Mundle, chairman of the Committee on Real Sector Statistics, says “Ours is a purely econometric exercise. The old and new series have been constructed by the Ministry of Statistics and Programme Implementation (MoSPI). We haven’t constructed the 2012 series or the old series. We only spliced the series. This was a technical exercise that did not involve data collection. We have not used proxies.” So where is the question of the government dressing up the figures, either earlier or now?
Three, why don’t we take heart from the fact that India is capable of achieving double digit growth – something most global economies can only dream of – and also has the ability to bounce back after global economic shocks? Which government rules at the Centre may not have as profound an impact as politicians think, on the way the Indian economy grows in such times.
Four, the government should now deflect further criticism of dressing up numbers by quickly releasing an official version of the back dated GDP data, calculated using the new base year. Till now, all it has done is clarify that the Mundle committee findings are “not official estimates and are meant only to facilitate taking a decision on the appropriate approach”.
An official statement said on Sunday that the Mundle committee recommendations will be examined by the government for deciding on the appropriate methodology to be adopted for generating the Back Series estimates for each sector.
“The Advisory Committee on National Accounts Statistics will be deliberating on the Back Series estimates before finalising the same for continuity, consistency and reliability”. The sooner this is done and final figures released, the better it will be for transparency in official data and credible growth estimates.
(The author is a senior journalist. Views are personal.)