GDP and its assumptions

New GDP back series does what the government needs it to — shows that growth during its term has been higher than during the UPA regime.

The Niti Aayog vice chairman has defended the official new series on grounds that it follows the System of National Accounts (SNA) 2008, recommended by the United Nations and so on.

Controversy over the growth performance of the Indian economy took another turn with The Indian Express breaking the story about Niti Aayog not allowing the back series to be announced three years back because it showed a higher growth rate during the UPA regime. The suspicion that the new official series announced recently was politically manipulated to show better performance for the NDA compared to the UPA is strengthened. The Niti Aayog vice chairman has defended the official new series on grounds that it follows the System of National Accounts (SNA) 2008, recommended by the United Nations and so on.

However, his argument that the sub-group of the Statistical Commission which released the earlier back series in July 2018 was not authorised to prepare a back series and, therefore, “there was no question of the government accepting it” is odd. The vice-chairperson undermines the credibility of a government committee and, in the process, his own. What should the public believe? We have three series of growth rates for the economy for the period 2004-05 to 2011-12. First, based on the earlier base year, 2004-05. Second, the series produced by the sub-group of the Statistical Commission in July 2018. And, now the third series produced by the CSO and jointly released by CSO and Niti Aayog.

The second series, which came to light in August, showed that growth during the UPA’s 10 years was better than that during the present government. This raised a political storm with the finance minister criticising the UPA for profligacy to achieve higher growth and leaving a mess for the NDA. The NDA government got a lifeline because the Committee on Real Sector, which released the series, stated that its series ought not to be taken as final. It stated that it had submitted its report to the Statistical Commission which would take a final view of what the revised series ought to be. So, the government legitimately argued that the final series would be released soon. What is now released is that final series.

From the political reaction of the government, it was expected, that the new final series would be different from the series released by the Statistical Commission. The new back series is what the government needed — it shows that growth during its term has been higher than during the UPA regime.