February 4, 2015 1:18:47 am
Despite a 50 per cent rise in the economic growth rate in 2013-14 under the new series, the country’s chief statistician TCA Anant cautions against comparing India’s growth rate with other countries, pointing out that the underlying level of the economy is also crucial. In an interview with Surabhi, Anant said that the Central Statistics Office will work to create a back series on economic growth based on the new series to understand how the economy has performed. Excerpts:
Is our national accounts data finally up to global standards?
No. One of our groups had given a report on SNA 2008 and we will be indicating which of the elements we have incorporated and which we haven’t. Some of them were not incorporated because it was not felt desirable while in other cases there were still some data issues.
What does the new data series indicate about economic performance in the post-crisis period since 2009?
Subscriber Only Stories
What we have given at present is only data for three years. Requests have come from the National Statistical Commission and the principal government users for a back series. So will give some guidance. But that is a separate exercise and it is not a very easy task. For the new series, we have used databases which were not readily available in the past such as the data from the ministry of corporate affairs, which was in the past not available in this form and coverage. Similarly, some of the tax databases, such as that on service tax, was also not available at that time. There is also a huge conceptual break in service tax just before 2011-12, as earlier services were on the positive list.
How will this data impact the projections for the Union Budget 2014-15?
The GDP numbers are exactly what we have computed. Government decisions on the Budget regarding expenditure, borrowing and size of the deficit are not based on the GDP but on ratios to GDP. What the chief economic adviser Arvind Subramanian said — and what is absolutely correct is that the government will need to announce how they are going to approach these critical ratios as this is a new series and a structural break from the past, they should not do this as a mechanical exercise but as a logical exercise.
Based on the new GVA data, there are a lot of comparisons of India’s growth with that of its BRICS peers such as China?
Growth comparisons are very tricky and without an understanding of underlying levels is not very useful. For example, China has a growth rate of 7 per cent. To argue, whether it is better or worse than say a four per cent growth rate in US is not immediately obvious.
The size of the two economies also matters. There is some evidence and literature that suggests that as an economy grows larger, you expect its growth to become slower. So what is the appropriate growth rate for a country should not be invariant to its level. Unfortunately, people don’t keep this maxim in mind when they compare growth rates. Growth rates desirability must be done carefully in combination with the level.
The Reserve Bank of India has indicated the third quarter growth for 2014-15 is likely to be weak. Your comments:
I am not in a position to comment on the third quarter growth data. But the information which goes into computation of third quarter growth is to a certain extent of what is used in the first two quarters for agriculture, etc. But the level of third quarter growth will also be influenced by the calculations of 2013-14.
📣 Join our Telegram channel (The Indian Express) for the latest news and updates