Economists Slug It Out as Debate Rages Over India’s GDP Data

(Bloomberg) -- Economists and advisers to India’s government came out in support of the official statistics, after a former member of Prime Minister Narendra Modi’s team suggested that economic growth numbers may have been overestimated.

A report by former Finance Ministry adviser Arvind Subramanian imparts “sensationalism through negativity that questions the credibility of the system,” members of the Economic Advisory Council to the Prime Minister wrote in a note. Subramanian’s research paper, published by the Center for International Development at Harvard University, estimated growth at about 4.5% between 2011 and 2017, rather than 7% shown by official statistics.

The nation’s gross domestic product data has been at the center of a raging debate ever since the base year was revised in 2015 to capture changes in the economy. Subramanian didn’t immediately respond to an email seeking comments about economists’ rebuttal to his research. Here’s a selection of those who came out to defend the official numbers:

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Ashima Goyal

• Professor at Indira Gandhi Institute of Development Research
• Member of Prime Minister’s Economic Advisory Council

The new methodology to calculate gross domestic product includes new databases, which take time to stabilize, said Goyal. “But potential sources of errors have been decreasing over time.”

Surjit Bhalla

• Senior India Analyst at Observatory Group

GDP revision with base year change is a routine exercise undertaken by most economies from time to time, said Bhalla. International experts from the United Nations, World Bank and International Monetary Fund were involved in the review exercise, he said.

Rathin Roy

• Director at National Institute of Public Finance and Policy
• Member of Prime Minister’s Economic Advisory Council

Questioning the use of indicators such as car sales, electricity and credit growth to compute GDP, Roy said “high frequency indicators can, at best, signal changes in different sectors.” “They are not estimates of value addition by these sectors," he said.

Charan Singh

• Chief Executive at EGrow Foundation

Computation of GDP is always a challenge, despite standardization of methodology, according to Singh. “Estimations are made, some based on surveys which are decades old because it is expensive to hold country-wide surveys annually, and checks and balances ensure that law of averages operate,” he said.

Omkar Goswami

• Chairman at Corporate & Economic Research Group Advisory

“Yes, there is possibly an overestimation of GDP growth during 2012-13 to 2017-18,” said Goswami, but suggests rigorously examining the data of companies before “jumping the gun to claim exactly how much overestimation there could be.”

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