So how fast exactly did the Indian economy grow around a decade ago? India is still confused about this.
On Aug. 17, the Narendra Modi government’s ministry of statistics and programme implementation (MOSPI) released the GDP numbers for the previous years under the new series that have been in use since January 2015.
According to this, the economy grew at 10.08% in the financial year ended March 2007 under the previous Congress party-led government.
While growth did slow down in subsequent years, on average it was still higher at 8.1% than under the present Narendra Modi-led dispensation—7.3% on average for the four years since 2014 when he took power. Yet, one of the pillars of Modi’s 2014 poll campaign was a perceived slowdown of the economy under Congress rule and the promise of achhe din (good days).
In the past one-and-a-half-years alone, economic growth has come under severe pressure following the demonetisation exercise of November 2016 and the introduction of the goods and services tax in July 2017. In the financial year 2018, GDP growth slipped to 6.7% from the previous year’s 7.1%.
Not surprisingly, the new data has sparked a political debate, besides confusion.
So much so that a day later the MOSPI added a caveat to its recent report: These are not the final figures. These disclaimers were not present till Friday (Aug. 17) and have been added subsequent to the release.
In 2015, the Modi government shifted to the new series for GDP calculation, for which the base year was changed from 2004-05 to 2011-12.
As a result, the country’s GDP growth rate rose overnight. For instance, for fiscal 2015, growth was sharply revised up to 6.9% under the new calculation from the 5% reported earlier.
However, one glaring problem with this shift was that data for previous years was no longer comparable, nor, therefore, relevant.
But that transition now appears to have deeply embarrassed the current government.
So, soon after the report was released on Aug. 17, the Modi government dismissed it, saying the numbers were not official and were only experimental. This move was perceived in some quarters as firefighting. Again, on Aug. 21, it was reported that the original report itself had been removed from the site. However, Quartz did find it on the MOSPI website, but through a whole new link.
Economists believe all this confusion could have been avoided.
“Now, the data has been placed on the ministry website which gives one the impression that the data has been accepted by the government. But later in chapter six, it mentions that the Central Statistical Office is still working on the data. And then later the disclaimer was also added,” explained Devendra Kumar Pant, chief economist at India Ratings and Research, referring to the root cause for the confusion.
It needs to be said, however, that discrepancies in data are normal when the base year is changed as they are dependent on multiple factors.