In new GDP metrics, govt slashes growth in UPA 1 and UPA 2https://indianexpress.com/article/business/economy/in-new-gdp-metrics-govt-slashes-growth-in-upa-1-and-upa-2-5469900/

In new GDP metrics, govt slashes growth in UPA 1 and UPA 2

The release of the GDP back series comes three years after the switch to the new base year of 2011-12 and three months after the release of a report of the Committee on Real Sector Statistics, which was submitted to the NSC.

In new GDP metrics, govt slashes growth in UPA 1 and UPA 2
Barring only two years, 2012-13 and 2013-14, the back-series data released for years preceding 2011-12 scaled down growth rates for 2005-06 to 2013-14 by 0.8 to 2.1 percentage points.

The economy grew an average 6.7 per cent in the four years of the first term of the UPA government (2005-06 to 2008-09) as well as in its second term (2009-10 to 2013-14), lower than the earlier estimates of 8.1 per cent and 7 per cent average growth rate (2004-05 base), respectively, as per the GDP back series data released Wednesday.

These growth rates are lower than the average 7.4 per cent growth rate (2011-12 base year) seen during the first four years of the present NDA government.

Barring only two years, 2012-13 and 2013-14, the back-series data released for years preceding 2011-12 scaled down growth rates for 2005-06 to 2013-14 by 0.8 to 2.1 percentage points.

For 2012-13, the back series based on the new base year (2011-12) revised up the GDP growth rate to 5.5 per cent from 4.7 per cent estimated earlier (2004-05 base year), while for 2013-14, the GDP growth rate was revised up to 6.4 per cent from 5 per cent estimated earlier.

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Sharp downward revisions were seen particularly for two years, 2007-08 and 2010-11. For 2010-11, the growth rate was revised downwards from a double-digit rate of 10.3 per cent to 8.5 per cent.

The release of the GDP back series comes three years after the switch to the new base year of 2011-12 and three months after the release of a report of the Committee on Real Sector Statistics, which was submitted to the National Statistical Commission (NSC).

In its report, the NSC-appointed committee had stated that the economy grew at a faster pace under the UPA government from 2004-05 to 2013-14, compared with the average growth during the first four years of the current government. The average GDP at market prices was 8.37 per cent during UPA-I (2004-05 to 2008-09), and 7.69 per cent during UPA-II (2009-10 to 2013-14), the Committee had said.

Pravin Srivastava, Chief Statistician of India, Wednesday said the new methodology is robust and aligned with UN Standard National Accounts. He said the report of the National Statistical Commission was taken in the “right spirit” but the calculations for the official back series were done jointly by Ministry of Statistics and Programme Implementation (MoSPI) and NITI Aayog.

“We had to recalibrate the entire economy based on the production output and the datasets available using the approach which is internationally accepted…we are more than confident that what we have produced today is more robust…it was a very comprehensive exercise. I believe that what we are seeing is perhaps a better depiction of what was there earlier,” Srivastava said.

When asked about the comparison with the estimates prepared by NSC-appointed committee, NITI Aayog Vice Chairman Rajiv Kumar said, “That was an econometric exercise…I must say it was methodologically not the right thing to do. It took the easy way out…I request you not to (compare)…you would be comparing very different apples with very different oranges.”

On whether it is a coincidence that GDP numbers have been revised downwards only for the UPA period, Kumar said, “No it was not a coincidence. It was a matter of hard work done by the CSO officials who had taken the pain to do all the recalibration of economy that they have done.” He said that the methodology adopted has been vetted by leading statisticians. Kumar further said the government had no intention to “mislead or try and do something purposefully” which does not reflect the reality.

Sudipto Mundle, the chairman of the committee on real sector statistics, told The Indian Express that though the back series should have come three years ago, he welcomed its release now. “I am glad it has come out. Should have come out three years ago but MoSPI was not biting the bullet. They have used data which only they could have mined, using proxies rather than going by an econometric method.”

Sectorally, the new back series data showed a lower contribution of the tertiary sector comprising ‘trade, repairs, hotels and restaurants’, ‘transport, storage, communication’ and ‘financial services’ in overall growth rates. Based on 2004-05 series, the share of tertiary sector in Gross Value Added (GVA) was 5.8 per cent in 2005-06, which dropped to 4.3 per cent as per the 2011-12 series.

The CSO attributed the lower share of tertiary sector to several factors such as usage of sales tax index and new series of WPI inflation as against Gross Trading Income index.

Also, in the communication sector, minutes of usage were adopted for calculations instead of subscriber growth in the earlier series. The share of primary sector in total GVA is higher in the new series than in the 2004-05 series due to changes in the data sources, the CSO said. In the mining and quarrying sector, regular annual returns of public sector have been used instead of Indian Bureau of Mines data in the 2004-05 base. The share of secondary sector in total GVA has increased in the back-series compared to the 2004-05 series mainly due to use of MCA data and public sector data in organised electricity and manufacturing sectors which was earlier sourced from annual reports of private electricity companies registered with the Central Electricity Authority and Annual Survey of Industries respectively, the CSO said.

The Congress hit out at the government accusing it of “manipulating” the data.

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Congress communication department head Randeep Surjewala said, “The new methodology is GVA based, which does not take into account tax plus subsidies and consequently is extremely flawed to subserve the myopic interests of Modi Government. The revised ‘New Series’ computed by Ministry of Statistics/Niti Aayog has undermined the National Statistical Commission, the autonomous body, for deciding data transparently and in accordance with global standards of calculating GDP as per Market Price Linked Methodology,” he said.