<b>Letters:</b> GDP growth rates

This refers to the report "FM in war of words with BJP leaders over growth rate" (September 24). The problem can be sorted out if the correct procedure is followed. There are three measures of central tendency, viz. mean, median and mode. Mean has three sub-divisions - arithmetic mean (AM), geometric mean (GM) and harmonic mean, each tailored to a specific context. What we call in common parlance as the average is the AM, which is arrived at by adding the figures in a series and dividing them by their number. While normally it works, for variables such as growth rate the right procedure is to compute the GM because of the changing bases. The correct position for the gross domestic product growth rates (GM) is given below in relation to what the finance minister has stated.

It appears that P Chidambaram's staff gave him the AMs (rounded off to one decimal) and not the GMs. The figures underlying the growth rates are humongous, so, even a second decimal change can make a lot of difference to the absolute values. Unlike in the current case the difference between the AM and GM could be substantial if the year-to-year variations are large. What is important is that the correct procedure is followed by the government. The results reveal that the United Progressive Alliance is in a favourable position vis-à-vis the National Democratic Alliance.

A Seshan Mumbai

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