CEA KV Subramanian addressed the press after the release of his maiden Economic Survey for 2018-19 (Express Photo by Tashi Tobgiyal)
Chief Economic Adviser K Subramanian has apparently rubbished his predecessor Arvind Subramanian’s claim that India’s GDP growth rates were overestimated.
Contradicting claims of the critics of data credibility, the CEA said, “Let me tell you from my own observation that India is an economy where there are many many touch-points for policy and in the six months that I have been part of the government, I have been able to see it from close quarters because there are several touch points for policy, it is very hard to try and create a narrative which is different from the truth.”
In a recent research paper published at Harvard University that formed the basis of his piece in The Indian Express, Subramanian concluded that the country’s growth has been overestimated by around 2.5 percentage points between 2011-12 and 2016-17. While official estimates pegged average annual growth at around 7 per cent during this period, actual GDP growth is likely to have been lower, at around 4.5 per cent, he had said.
The former CEA claims kickstarted a debate with the Prime Minister’s Economic Advisory Council (EAC-PM) issuing a point-by-point rebuttal eventually.
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In its response, the EAC-PM stated that Subramanian had cherry-picked a few indicators and performed a rather unconvincing regresssion analysis to prove his hypothesis that India’s GDP was overestimated post 2011-12.
READ | Subramanian cherry-picked few indicators to prove his hypothesis: EAC-PM rebuts ex-CEA’s claims
K Subramanian further pointed out 8 per cent sustained growth is required for India to achieve USD 5 trillion economy by 2024-25, citing investment to be the key driver for pushing the economy to the top gear and ensure job creation. “Investment cannot go up unless the cost of capital goes down. One key opportunity we have is that the cost of capital internationally is very low, liquidity is very high there and as a result, there is an opportunity for both firms and sovereign as well to think about going and raising money abroad,” he said.
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