Estimation error?: Government estimates go awry when growth trends down

Historical analysis shows that the government tends to underestimate the growth in agriculture every year; as growth has slipped in the last few years, it has fallen prey to overestimation errors

On May 31, the Ministry of Statistics and Planning (MOSPI) released its provisional GDP estimates for 2020-21 and fourth-quarter GDP figures. Given the muted growth in the third and fourth quarter, the country’s GDP, according to MOSPI, contracted 7.3 per cent—the first time in four decades. However, the numbers were still a surprise as the second estimates released in February had indicated an 8 per cent contraction for the economy.

While projections from RBI and others highlight a bounce back in 2021-22, the data for 2020-21 is subject to three more revisions over the next three years.

And, historical analysis