The Congress has raised doubts over Centre’s GDP growth projection of 7.6 per cent for the current fiscal. Questioning methodology of calculating growth rate, Congress party alleged Prime Minister Narendra Modi was encouraging financial jugglery.
“With there being low production and capital utilisation in many sectors, we have to wonder the veracity of this (official economic) data. India was always known for having credible statistics prior to the arrival of Modi government,” Congress party released a statement late on Tuesday.
“Modi government is obsessed with its image. In his quest to mask his failures in trying to fulfil the audacious promises he made, Modi is encouraging financial jugglery to maintain some semblance of credibility,” the statement read further.
Last month, RBI governor had posed questions about the way GDP figures are calculated by the Central Statistical Organisation.
Claiming extreme rural distress, agrarian crises, drought in several belts across the country, exports going down and stagnant job growth, Congress party in its statement titled “Modi government’s new GDP projections raise more questions than they answer”, said that many experts have questioned the nature of this data.
“The methodology for the calculation has been questioned by many, including RBI Governor Raghuram Rajan. The RBI said that for the first time the GDP is growing lower in nominal terms than real terms,” the party said in the commentary posted on its website.
Rajan had last month said that country needs a better methodology to capture growth measured in terms of gross domestic product (GDP).
Speaking to students at the Indira Gandhi Institute of Development Research, he said, “We have to be a little careful about how we count GDP because sometimes we get growth because of people moving into different areas. It is important that when they move into newer areas, they are doing something which is adding value”.
BJP-led NDA government have adopted a new formula to calculate growth rate, which is based on market prices. The formulae has come under criticism with analysts saying that barometers such as bank credit growth, jobs and consumer demand paint a less healthy picture even tough growth rate suggests India to be one of the fastest growing economies.
The Congress party have also questioned the GDP deflator, which has given a confusing picture from quarter to quarter.
“The GDP at ‘constant prices’ grew at 1.3 per cent more than the ‘current prices’ in Q2 of FY2016, but in Q3 of FY2016, it grew 1.9 per cent less. This 3.2 per cent difference has baffled many observers, raising more questions than answers on the GDP numbers,” the principal opposition party said.
Besides, it underlined that agriculture grew at 1.1 per cent, jobs have not been growing, exports are still languishing, the IIP shows a negative growth. “Yet we are told that the economy is on the road to recovery,” Congress party said.
Gross Capital Formation for FY2016 is at 29.4 per cent of the GDP, down from 30.8 per cent in FY2015, which casts further doubts on the claimed recovery, it added. At the outset, the Congress said the Modi government continues to “confound” economic experts with their official economic data.