As the government ponders over the back series of GDP that created a political storm, a Finance Ministry adviser has hinted that the methodology may be technically acceptable despite its quirk.
Principal Economic Adviser to the Finance Ministry Sanjeev Sanyal, in an interview to IANS, said all methodologies to reconcile new series GDP data with the old will have some kind of quirk and it is perfectly acceptable if the quirk is known.
"Every single methodology will have some quirks...Now as long as it is technically correct and we are aware of this quirk in it, it's acceptable. Up to 2002, it shows all growth rates depressed and after 2002 it increases all growth rates," he said.
"Now is this a cause to be suspicious? No. All we say is that we need to be clear why this methodology does what it does...the technical advisory committee will have to go through it, let them look at it, it may be perfectly good," Sanyal said.
The Indian government changed the base year for GDP calculation from 2004-05 to 2011-12, by changing the goods and services in the basket to make it more current, in 2015 but needed a back series for long term comparison of economic growth.
The Committee on Real Sector Statistics, which reconciled the new series GDP data with the old, submitted its report to the National Statistical Commission (NSC) earlier this month and the NSC has now invited public opinion on it by September 30.
The GDP back series showed higher economic growth in the period coinciding with UPA-1 compared with the NDA-1 regime. This generated a political slugfest between Congress and BJP after the former claimed its economic policies to be superior.
However, Sanyal said: "This series is not needed for this debate. It was similar with the old series also because the GDP growth rate of the mid-2000s is very, very high even in the previous series. So, you don't need this series to have this debate."
He said when the government correctly updated to a series starting 2011-12 people criticised it as it did not match with the previous methodology. Now the same people are excited about this series created for longer term comparison.
"It is a series based on certain weightages which is considered a reasonable weightage for a particular point in time. It is an approximation that is considered technically acceptable at a point in time. All kinds of trade-offs have been made in order to arrive at this particular method," the adviser said.
"Remember these are all approximate measures of growth. There is nothing natural about GDP measurement. It is a convention based on a certain base. So whichever base I create, whatever convention I take it will have some quirk in it," he said.
Sanyal said as long as people recognise that it is technically correct and this kink is not happening because of some calculation error or some flaw in the methodology,"it's perfectly fine even if it has this kink in 2002, fine, that's ok".
However, the economic adviser said he is not part of the committee looking into the validity of the back series of GDP and does not know when the government will take a final call on it.
(Manish Gupta and Vishav can be contacted at manish.g@ians.in and vishav@ians.in)
--IANS
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