India’s GDP growth rate is being labelled an overestimate yet again and economists argue the lack of data credibility in the country. Examine.
Data released by the Ministry of Statistics and Programme Implementation (MoSPI) surprised most economists and forecasters.
The Q4 growth rate is found to be at 3.1%, as released in the provisional estimates.
For instance, markets expected Q4 GDP to grow at “minus” 1.5% — that’s a contraction by 1.5%. Other most estimates suggested a growth rate of just 1% to 2% in Q4.
Former Chief Statistician of India, Pronab Sen, has gone on record to say that in the fourth quarter (January to March) of the last financial year, the GDP is likely overestimated by as much as Rs 2 lakh crore — that’s 1 per cent of India’s annual GDP.
It is argued that there is a lack of robustness and credibility in macroeconomic data and it is one of the (side-)effects of the extensive regulatory forbearance provided in the wake of Covid-19 disruption.
But this is not the first time that allegations of GDP overestimation have come up.
India’s national income accounts have suffered a lot of fluctuations in the recent past.
Critics demand that the CSO (Central Statistics Office) come out with a methodological note explaining the reasons of why the data has become so volatile in last 2-3 years?
Is it because the economy is undergoing a structural change that CSO is not able to capture?
India’s national income accounting has come in for sharp criticism in the past few years — some even suggesting that its credibility is going the China way.
Data credibility needs to be restored, and soon. This is as critical for an economy that wants to grow as is an accurate reading of temperature for a person wanting to get better.
