The release of the new GDP back series data on Wednesday shows that the economy grew at an average of 6.7 per cent between 2005-06 to 2008-09 as well as between 2009-10 to 2013-14, the first four years of the UPA government’s two terms — lower than the earlier estimates of 8.1 per cent and 7 per cent average growth respectively going by the earlier 2004-05 base. This is much lower than the average growth of 7.4 per cent under the new series with 2011-12 as the base year recorded during the first four years of the Narendra Modi-led NDA government. The data shows sharp revisions, especially in 2007-08 and 2010-11, with the growth rate being scaled down from a high of 10.3 per cent in 2010-11 to 8.5 per cent.
The downgrading of growth figures has angered the Congress which has often claimed credit for the stewardship of the economy during those high growth years. It has accused the government of resorting to malicious and fraudulent jugglery of GDP figures to hide what it terms as the enormous body blow it has caused to India’s economy. Former Finance Minister P Chidambaram went so far as to dub the new data a bad joke. Finance Minister Arun Jaitley has defended it, saying that the new GDP series is globally comparable as it takes into account a far greater representation of the Indian economy and is more reflective of the real state of the economy. The spat over economic data isn’t new. In January 2015, when the government switched to a new series with 2011-12 as the base year, and subsequently after the report of the Committee on Real Sector Statistics which was mandated by the National Statistical Commission to work out a robust methodology under the new series a few months ago, there was a controversy, with agencies such as the IMF besides the RBI flagging their concerns. The release of the data under the new series in 2015, and also later, had led to sceptics questioning the validity of growth figures.
One way to view this political wrangle is to acknowledge that mainstream political parties are now extremely mindful of the level of economic growth. Revisions in economic growth data are not uncommon elsewhere but what political parties ought to keep in mind is the potential damage to credibility and its impact on investors, both global and domestic, who rely on the quality, reliability and consistency of data when they pump in money and on informed policy-making. This may have prompted the former RBI Governor, Y V Reddy, to famously quip that in India, not only the future but even the past is uncertain — not a happy augury for an economy in the global top six league.