Never before has the growth rate of past years been such a hot topic of political debate and controversy in India. The Central Statistics Office (CSO) and NITI Aayog’s recent release of ‘back series’, which recalculated the growth rate from 2004-05 using 2011-12 as the base year, came out with some rather startling revelations.
According to the new ‘back series’, the average growth rate during the 10-year UPA rule was 6.8 per cent and 7.3 per cent during the four-year NDA rule. This goes against the received wisdom of growth rates peaking during the UPA-I regime and slowing down in its second term. The new ‘back series’ also negates the findings of the National Statistical Commission, which were admittedly provisional, and claimed that growth topped 10 per cent twice during the UPA regime. CSO and NITI Aayog have rejected the National Statistical Commission’s findings, citing methodological issues, though details regarding this are awaited.
Harsh criticism
These recent ‘reworked’ growth figures naturally led to howls of protest from the Congress party. Former Finance Minister P Chidambaram led the chorus by saying, “NITI Aayog’s revised GDP numbers are a joke, a bad joke. The numbers are the result of a hatchet job.” Congress’ official statement was even more savage in its criticism, calling the NITI Aayog the puppet of the government and the ‘back series’ data, “gimmickry, jugglery and chicanery”.
NITI Aayog chief Rajiv Kumar accused the Congress of “denigrating the intellectual and technical competence of not only CSO experts but also 10 leading statisticians”. Finance Minister Arun Jaitley also came in defence of the new series and accused the Congress of questioning the credibility of the CSO.
So, a technical and arcane exercise of reworking past growth data, which would normally excite only economists, statisticians and policy wonks, has been successfully politicised and turned into headline news. But who is to be blamed for this needless politicisation of this issue?
Hard to believe
The NITI Aayog’s involvement in releasing this information has certainly raised eyebrows on the government’s intentions. The NITI Aayog is a politically formed think-tank unlike the independent Central Statistics Office. Former Chief Statistician Pronab Sen said that this was the first time a body other than the CSO was releasing the GDP figures and added that the NITI Aayog’s involvement could have been avoided. Sen, speaking to PTI , said, “The credibility of CSO has been badly dented not because of the data but because of the manner in which the release has been done.”
But keeping the political wrangling aside, it seems hard to reconcile the data put out by the CSO with some of the ground realities. It is, of course, not fair to question the findings without a more rigorous analysis of the numbers and the methodology used.
But the four-year NDA rule saw two of the biggest ‘disruptions’ in the economic realm — demonetisation and the GST. Prima facie it is hard to believe that despite these two major ‘disruptions’, the economy still managed to post an average growth rate of 7.3 per cent in the four-year period. Demonetisation, by most accounts, created widespread turmoil in the unorganised sectors and agriculture trade. Almost 90 per cent of the work force is engaged in the cash-reliant, unorganised sector and their lives were thrown into disarray due to the note ban. So, either the numbers are not catching something vital in the economy or the impact of the note ban was less disruptive than expected, which is hard to believe.
Other problems
If one adds to the list other major economic problems being faced in recent times — agrarian distress, poor jobs growth, tepid private industrial investments and ballooning bank bad debts — then the 7.3 per cent average growth seems even more puzzling, throwing up more questions than answers.
This brings us back, unfortunately, to the political aspects of this issue. That the growth was higher in the NDA period is something this government will use to earn brownie points not just with the voters but also with credit ratings agencies and investors — both foreign and domestic. With the general elections just a few months away, the new back series is a handy stick for the NDA to beat the UPA with. Especially having received flak over its recent spat with the Reserve Bank of India, this growth data will be seen as god-send for the government.
The last word must surely go to former RBI Governor YV Reddy, who once quipped that in India not only the future but even the past looks uncertain.