There is a tendency to overstate the impact of currency ban: TCA Anant

Chief statistician feels that policy interventions is needed to catapult growth into double digits

Chief Statistician TCA Anant tells Indivjal Dhasmana in an interview that comments on demonetisation are simplistic and do not adhere to statistical standards. He adds the economy needs policy interventions to catapult growth into the double digits for a sustainable period. Edited excerpts:
 
Is it a coincidence that the gross domestic product (GDP) growth number remained the same for 2016-17 at 7.1 per cent in the first, second and actual estimates?
 
It is a coincidence because compilations are independent. When we project data for the full year, we try to be as careful as we can. Unless there is a change in the underlying parameters, projections by and large hold. If you look at the long time series, the difference between advance and provisional estimates has always been small. The correction is substantial at the time of the revised estimates because more data become available at that stage.

 

For 2016-17, you have taken the revised series of the index of industrial production (IIP) and the wholesale price index (WPI) in the provisional estimates.
 
Forget 2016-17, the difference between earlier estimates for 2012-13, 2013-14, 2014-15 and 2015-16 and the new numbers with the new IIP and WPI series is also small. Yes, the revised IIP and WPI series played a role, but that role is muted because of the way these were integrated into the GDP data. A larger part of the variation occurs not in annual estimates but in the quarterly estimates, and this is visible in the data.

 
Commentaries say GDP growth crashed in January-March. Do you agree?
 
Comments on the impact of demonetisation had been made even before the data had come in. As a statistician, I do not find merit in these observations. To gauge the impact of demonetisation on the economy, I need counter-factual figures: what would economic growth have been had demonetisation not been there? What most commentaries have been doing is comparing economic growth with last year’s numbers and attributing it to demonetisation. That is a logical fallacy. If you take the first advance estimates as counter-factual, since these used data till October, you will find GDP growth in 2016-17 is identical to the one given by the provisional figures. I am not comfortable using first advance estimates as counter-factual figures, but what I am saying is that simplistic analyses will lead you to all sorts of statements that are not statistically robust.

 
Was the slowdown because of a big increase in price deflators?
 
The difference between nominal and real GDP growth rates for both 2016-17 and the previous year is explained by the WPI behaviour. My sense is there is a certain wishfulness in stating demonetisation was a much bigger problem than it actually was. I am not saying there is no impact of demonetisation — it had some negative impact, it had some positive impact. It is difficult as a statistical exercise to say what those elements were. What is clear is that the economy has maintained a robust level of growth. That is discernible from the data.

 
Do you think the economy needs a policy boost?
 
Of course.
 
Should this include lower interest rates?
 
I do not specifically comment on the repo rate. What the data show is that the economy grew by 7.1 per cent in 2016-17. But this is significantly lower than what we would like the economy to grow on a long-term basis for a sustainable period of time. The Niti Aayog had some time ago said it would like the economy to grow at over 10 per cent for more than a decade. Macroeconomic interventions to achieve that transformation of the economy are certainly called for. It will not be appropriate for me to say what those interventions are.