NITI Aayog Vice Chairman Rajiv Kumar said new GDP Back Series numbers released last week is purely based on facts and the data now are much more in sync with the System of National Accounts of the UN of 2008. “There is no reason for anybody to cast any aspersions on it. And the CSO staff is not political set of people, they are professionals,” he said in an interview with The Indian Express.
Q There is a wide divergence between GDP numbers presented by Committee on Real Sector Statistics and the CSO (Central Statistics Office). What explains this divergence?
A. Before I explain the divergence I must mention to you that to the best of my knowledge, the Committee on Real Sector Statistics was not supposed to estimate back series. They probably did it because there was a delay in the release in the back series by the CSO and they thought they were doing a public service, so they were not expected to and therefore there was no question of the government accepting it. That’s the first thing. The second point is, as explained by CSO in their note to the Committee, it said that the committee did not adopt the System of National Accounts, 2008 that is now recommended by the United Nations. The production shift method is not recommended, what is recommended is volume extrapolation and this is what the MOSPI has done. And as you will see their whole thing depended upon the estimation of GDP for 2011-12, which is the link year, where they found a gap of Rs 3 lakh crore, higher by 2011-12 basis, and then they spread it evenly across past 18 years assuming that there is no sectoral shift, as a result of which the levels went up and so did the growth rate for those years. Now that’s neither here nor there. MOSPI has done a lot of other improvements, as a result of which the results are as different as they are, and I can vouch for their professional integrity. Ten leading statisticians /economists of the country have reviewed and vetted this methodology. Therefore to cast any aspersions on the CSO and is simply not the right thing to do.
Q. How do you respond to criticism of NITI Aayog’s (which is chaired by the Prime Minister) presence in release of CSO number? Economist Surjit S. Bhalla has written that NITI Aayog’s presence was inappropriate. Is it fair criticism?
A. No, it’s completely unfair and I am afraid that friend Surjit is being unkind. Everybody knows that until not too long ago the Department of Statistics was part of the Planning Commission. There has always been very close links between the two simply because we use data so extensively and we work together. For example, the task force on employment statistics was chaired by my predecessor. Its recommendations are now being implemented by the CSO. In this case also, when they were about to release the ‘Back Series’, they asked us to have a look. NITI organised two roundtables and having done the roundtables, where in the experts gave a lot of valuable suggestions. NITI provided the platform and subsequently, the CSO requested participate in the release. Both MOSPI and NITI are components of the Government of India, right, so why would it be political. So where is the issue and I think Dr Pronab Sen having raised that issue, is totally unnecessary. And back series is not just a ‘technistic ‘ excercise, it’s an issue with many dimensions and it affects the whole macro economy.
Q. So you think data is purely based on facts?
A. I not only think, I am convinced, I made sure, I got other leading statisticians to look at it, and the data is not just simply factual and correct, it’s a significant improvement because of all the factors that CSO has explained. The data is now are much more in sync with the System of National Accounts of the UN of 2008. There is no reason for anybody to cast any aspersions on it. And the CSO staff is not political set of people, they are professionals. And now they have brought out a GDP number (July-September quarter) which is lower, then? What should I say, if they were politically driven, then this would have been higher than the previous quarter. If it was political, then this is a negative political message would also have been avoided.
Q. How do you respond to Former Finance Minister P. Chidambaram’s comments of calling the revised GDP data a ‘bad joke’ and you accepting this challenge for a debate?
A. It’s because he tweeted that Niti Aayog Vice Chairman should accept the challenge rather than tell the anchor not to ask some questions. To become so politicised and use epithets rather than give any facts, none, zero, raised by hackles. He is such a learned person and in fact in one of my tweets I wrote that it doesn’t match up with his acumen to do it. Just because the data came out not in favour of your party, you have gone on and gone ballistic. Look at the data, go into the details, tell us our mistakes, we will accept them. If you base your criticism on some technical reasons, it gives us a chance to improve it but to just call names and cast aspersions on an organisation’s integrity, is the worst thing that you can do. Why would you do that? Such base revisions are always done, it’s done in every country of the world.
Q. So you are willing to debate the facts and the methodology?
A. Yes, absolutely. Welcome. With my colleagues in the CSO, let’s sit across the table, and they can bring in as many technical people as possible. And I will arrange a discussion in NITI Aayog and I also undertake that if at the end of the discussion, methodological errors are pointed out; we will try and correct them. But that’s the way to go and not simply go over the top and start calling names. That’s simply not the way to do it.
I will give you an example. Professor Nagaraj was saying that for the corporate sector, the 2011-12 series, uses the Ministry of Corporate Affairs data, which is much bigger. Prior to that, earlier series used the ASI (Annual Survey of Industries) data or the establishment data. They have used enterprise approach which means each enterprise can have multiple establishments. MCA data gives the consolidated balance sheet, which is much much better. Professor Nagaraj’s argument is that for the data going backwards CSO did not use the MCA data, and used the ASI data, and ASI data understates growth, so previous years, growth has been understated. I checked upon this, what’s happened is that for the back series what they have done is for the organised manufacturing, they have used the ASI non-corporate data, which is the same in the current series 2011-12 series. Which means that they exclude the departmental enterprises, non-departmental enterprises and they computed from ASI taking into account non-corporate part. This is what they have done for the non-corporate sector, which is the same for the back series. Now for the private corporate sector, they have used for the MCA database, and for beyond 2010-11 they have used the ASI data. But then for the departmental and non departmental enterprises they have used the same data for all period, which is given by their annual reports and budgets. And for unorganised sector also, they have improved upon it because now they are using the 67th round of the NSSO (National Sample Survey Organisation) survey, so they have much larger database. Moreover, they are now using sector specific price deflators, CPI and WPI for capital goods and consumer durables etc. So there is only one part of corporate sector data for which ASI data has been used prior to 2010-11 because of complete lack of data. In fact, the share of secondary sector has risen in the new series.
Downward revision in growth rates has happened because the new series much better estimated the growth rate of the tertiary sector because these were overestimated in the previous series. I will give you an example, in case of telecommunications, growth of telecommunication services was extrapolated from the growth in the number of subscribers. This is incorrect and gives a much higher estimate than is warranted. Now they have used the growth in data usage, which is much better. That’s why the growth in telecommunication had come down. Similarly for industry related trade services and general trade there are also major changes in coverage and methodology. The three sub-sector which account for the dominant share of downward revision are telecommunications, financial services and unorganised trade.
Q. So far people in present government have argued that the UPA expanded fiscal deficit and lifted credit growth sharply. This should have led to higher growth than in the present regime. But the back series data negates this argument.
A. It’s not that there is no growth. Just that the growth rate has come down from the levels it was shown in the previous years. One reason is the contribution of services sector to overall growth has come down. From 2006 to 2012, the government told banks to boost credit growth, but it was going into such projects which didn’t lead to expansion of output. If your efficiency of capital has declined, then the capital-output-ratio increases very sharply. Suppose you put money (Rs 2.1 lakh crore) in power plants, but did not yield commensurate increase in output. So it’s not necessary that high investment will produce high growth, because of inefficiency in usage of capital.
Q. Apart from these issues, former CEA Arvind Subramanian had called demonetisation a draconian monetary shock. What is your view?
A. See I don’t have any problem because he had analysed the subject in Economic Survey. But the only issue is that he says demonetisation hurt the elite and the rich and tried to help the poor. The question is that it never tried to hurt the elite but it tried to hurt the corrupt. So how can Subramanian equate the two and he never used the word draconian in the Economic Survey, why now? My major problem is that he is making it out as if the government is against the rich in general. No. The government is against those who are making money by not by the right means. And the whole exercise was to get out the income of those people out in the open, which has now been achieved.