India’s BJP-led government has released a set of revised GDP data that dramatically reduces growth during the previous administration’s tenure

• India’s Ministry of Statistics, in conjunction with government think tank, Niti Aayog, released a back-dated series of GDP data on 28 November.
  
• The data showed that growth under the previous Congress government between 2004-05 and 2013-14 was less than what the current BJP-led administration has achieved over the last four years.
  
• The government has said the latest data takes into account wider changes in the primary, secondary and tertiary sectors of the economy as well as different data sources and methods of calculation.
  
• The timing of the release is significant as India prepares to go to polls next year, and crucial state elections in Rajasthan and Madhya Pradesh are underway.
  
  

India’s Ministry of Statistics and Programme Implementation (MoSPI), in conjunction with government think tank Niti Aayog, released a back-dated series of GDP data on 28 November.

The report has raised more than a few eyebrows as it showed that growth under the previous Congress government between 2004-05 and 2013-14 was less than what the current BJP-led administration has achieved over the last four years.

The average annual growth under the first four years of the Congress government’s first tenure between 2004-05 and 2008-09 was pegged at 6.7%, compared to an original estimate of 8.1%. In addition, growth under the Congress government’s second tenure between 2009-10 and 2013-14 was also downgraded to 6.7%, this time from an original estimate of 7%. Meanwhile, growth under the BJP government between 2014-15 and 2017-18 has been estimated at 7.4%.

The move comes three years after the government changed the base year for calculating GDP growth from 2004-05 to 2011-12 in order to “better reflect the economy by adding more sectors”, according to the Pronab Sen, the former chairman of the National Statistical Commission (NSC), which is housed under the MoSPI.

The latest report actually contradicts a set of data released in August 2018 by the Committee on Real Sector Statistics, which was appointed by the NSC. In its report, the committee found that growth under the Congress government’s two tenures, at 8.4% and 7.7%, respectively, was higher than under the BJP-led government in the last four years. As expected, these findings proved to be controversial, with the Rajiv Kumar, the vice-chairman of Niti Aayog, reiterating that the data was “unofficial”.

In response to these numbers, Kumar said that the latest report was more in sync with the international system of economic accounting.

What explains the revision of data?

Like most things, there a number ways to approach the calculation of statistics and hence, it isn’t a stretch to imagine that methodologies can be tailored to suit certain outcomes.

The government has said the latest data takes into account wider changes in the primary, secondary and tertiary sectors of the economy as well as different data sources and methods of calculation. For example, growth estimates in the agriculture and mining industries, which fall under the primary sector, were less than what had originally been calculated.

In addition, the benchmark estimate for the telecom sector was changed from the number of telecom subscribers to the total minutes of usage, while the RBI’s contribution to growth in the financial services sector was given lower weightage. This served to reduce estimated growth in the tertiary sector during the Congress’s tenure.

Election ploy?

The timing of the release is significant -- India is preparing to go to the polls next year, and crucial state elections in Rajasthan and Madhya Pradesh are underway. The participation of Niti Aayog, which usually doesn’t dabble in the calculation of economic growth, has also raised concerns that the release of the latest GDP data is politically-driven.

P. Chidambaram, the former Finance Minister during the Congress years, made his distaste for the new data quite clear:


Whether the report is politically-driven or not, the central government will likely tout its superior management of the economy in an attempt to sway voters. Barbs will be traded over the accuracy of the data and people will choose to believe what they want to believe. What should be noted, however, is that the new data has no bearing on the direction the economy is headed in currently.


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