The ongoing blame game over the back series gross domestic product (GDP) growth rate data reflects the obsession of political parties over the GDP number as if it is the sole indicator of the country’s economic performance. The GDP has been the favourite whipping boy of parties, so much so that the figures are selectively quoted by them to bolster their argument and undermine the opponents.
The back series data, released by the Central Statistics Office (CSO) recently using new methodology, shows that the GDP growth during the UPA regime from 2004 to 2014 averaged 6.7% while the present NDA government has witnessed an average of 7.35% during the last four-and-a-half years. This has, understandably, triggered a war of words with the Congress crying foul and accusing the Centre of trying to fudge figures to suit its political narrative ahead of the general elections.
The new number lowers the peak GDP growth rate under the UPA from 10.3% in 2010-11 to 8.5%. In 2015, the government switched to a new method for the calculation of the GDP, adopted the gross value added measure to estimate economic activity and brought forward the base year used for calculations to 2011-12 from the previous 2004-05. The arguments over the GDP numbers, which are arrived at through a set of assumptions and complicated calculations, can be very tricky as they are amenable to flexible interpretation to suit one’s preconceived narrative. Significantly, the new data shows that, contrary to the earlier perception, the Indian economy never graduated to a ‘high growth’ phase of more than 9% in the last decade.
The key question that needs to be answered is why the investments are down and why the export growth is sluggish if the GDP growth in the last four years has been better than the one in the UPA years. Moreover, the credit growth has been sluggish, job creation has been poor and farm distress continues to be a cause for concern. In an economy where the unorganised sector has a predominant role in shaping people’s lives, the GDP growth number can at best be a rough approximation.
It would be naive on the part of political parties to squabble over decimal points and, in the process, ignore the larger picture. While the GDP number provides an estimation of the total income being produced in the country, what is equally important is how this income is distributed among different sections of people. The new series data, with 2011-12 as the base year, has been vetted by statistical experts at the international agencies like the UN, IMF and the World Bank. The ongoing debate over the accuracy of the new data is entirely political.