Getting the GDP numbers right

Estimates are not perfect, but the process is revised and fine-tuned.

Arvind Subramanian, Arvind Subramanian research paper, Arvind Subramanian GDP claims, India GDP, Indian economy, indian GDP overestimation, Economic Advisory Council to Prime minister, EAC-PM, indian express — Former Chief Economic Adviser Arvind Subramanian. (Express photo by Prem Nath Pandey)

Former Chief Economic Adviser Arvind Subramanian’s recent paper claims that the Indian GDP growth may have been overestimated by 2.5 per cent per annum between the period 2011-12 and 2016-17. A note by Prime Minister’s Economic Advisory Council (PMEAC) rejects the methodology, arguments and conclusions of Subramanian’s paper. A study done at our institute by Ashima Goyal and Abhishek Kumar show that after removing various flaws in Subramanian’s data and procedures used, these indicators suggest official growth rates are overestimated before 2011 too. This study also shows that the GDP growth in a large number of countries is either overestimated or underestimated using these indicators. Therefore, the study rightly says that “these regressions cannot be used for predicting growth or for concluding Indian growth is overestimated or for pointing to problems in the estimation methodology”. It is better now to concentrate on the next base revision by focusing on methodology, coverage and data in estimating GDP. There is no point in saying that GDP estimation has problems because ground level realities are different using some indicators.