Finance Minister Arun Jaitley on Thursday defended the revision in India’s GDP growth rate during the previous UPA era, saying it was done by a “highly credible” organisation, the Central Statistics Office, which maintains an arm’s length distance from the finance ministry.
He said the revised numbers, based on a new formula with 2011-12 as the base year, are globally more comparable as they take into account a far greater representation of the Indian economy and are more reflective of its real state.
Taking on opposition Congress for criticising the revision, he said the Congress had welcomed the upwards revision in growth numbers of the last two years of the UPA regime by the same CSO and had gone to the extent of saying that the “the new GDP series has concludedly established that we did not mismanage the economy”.
A day after Chief Statistician Pravin Srivastava, in an unusual move, announced the revised numbers based on back series data alongside Niti Aayog Vice Chairman Rajiv Kumar, Jaitley said, “I don’t think any service is being rendered by people who choose to discredit a highly credible organisation like the CSO because its data is based on facts and the revised formulations, (and it is) a continuous exercise because every time you try and improve upon the formulations to make them more representative of the real state of economy.”
The new numbers show India’s economic growth rate averaged 6.7 per cent during the Congress-led UPA regime as compared to 7.3 per cent under the present government. Previous numbers had put the average growth rate during the 10-year UPA rule at 7.75 per cent.
The finance minister said what was welcomed by the UPA in 2015 is now being criticised because the GDP growth has been revised downwards.
“The CSO is a highly credible organisation, it maintains an arm’s length distance from the finance ministry,” he said. “In fact, we also come to know of the data only when it is released. All former individuals and eminent people who headed the CSO are of the same opinion that this data is far more inclusive and far more reflective of the situation of Indian economy and therefore has far greater credibility.”
Former Finance Minister P Chidambaram had Wednesday called the revision a “bad joke.”
Jaitley said the CSO Wednesday published figures working backwards on applying the new GDP series.
“It was in February 2015 that the CSO worked on a new formula with 2011-12 as the base year and the new GDP series was announced. At that time, they had revised the new GDP series from 2012-13 onwards. Since then, all GDP data whether quarterly or annual have been based on new series.
“This new series is globally more comparable, it takes into account a far greater representation of the Indian economy and is more reflective of the real state of Indian economy,” he said.
He said that in 2015, the CSO revised the GDP growth of the last two years of the UPA — 2012-13 and 2013-14. “Curiously at that time the revision had made the GDP growth move upwards. So there was an improvement in those 2 years. At that time, it was welcomed by the people in the then government. In fact, they said that the new GDP series has concludedly established that we did not mismanage the economy,” he said.
“Now in continuation of the same exercise, applying the same yardstick, the new series has been made applicable from 2004-05. So the growth on the basis of new series may be revised upward or downward depending on the applicability of the data,” he said.
Jaitley said the formula is the same.
“So when you compare GDP from 2004-05 till 2018, you cannot have two different periods with two different yardsticks. The yardstick has to be the same. Now based on the same yardstick, for the earlier eight years of UPA, the GDP has been revised downwards. So you gain in some years and lose in some years. Data is realistic, it is not fictional. And this formula is globally more comparable,” he said.
Just months before the general elections, the country’s economic growth rate during the previous Congress-led UPA regime was lowered Wednesday, shaving off over 1 percentage point from the only year when India posted double-digit GDP growth post liberalisation and from each of the three years with 9-plus per cent expansion.
Recalibrating data of past years using 2011-12 as the base year instead of 2004-05, the CSO estimated that India’s GDP grew by 8.5 per cent in the financial year 2010-11 (April 2010 to March 2011) and not at 10.3 per cent as previously estimated.
Similarly, 9.3 per cent growth rate each in 2005-06 and 2006-07 was lowered to 7.9 per cent and 8.1 per cent, respectively, while 7.7 per cent rate was now estimated for 2007-08 instead of 9.8 per cent.
Chidambaram had called the revision a “hatchet job” by Niti Aayog.
“Now that Niti Aayog has done the hatchet job, it is time to wind up the utterly worthless body,” he had tweeted. “The earlier numbers were calculated by the National Statistical Commission. Has the commission been disbanded?”
“Former Chief Statistician Pronab Sen is absolutely correct. Niti Aayog has nothing to do with tabulation of data,” he had said. “I wonder if Niti Aayog Vice Chairman Rajiv Kumar will agree to a debate the data than telling journalists that their questions are “undeserving of an answer”, he said.