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Is India overestimating growth? ‘Arvind Subramanian’s GDP formula is political, not intellectual’

17-Jun-2019Charan Singh

In the recent article, Arvind Subramanian, former Chief Economic Adviser (CEA), Government of India, has observed that India’s growth estimates are significantly overestimated since 2011-12. In fact, official estimates are around 7 per cent of annual average growth but according to Arvind Subramanian, actual growth rate, most probably, would have been 4.5 per cent, or even as low as 3.5 per cent. Arvind Subramanian uses various econometric techniques on data from India and cross-sectional panel, to justify his argument. Arvind Subramanian also argues that his criticism is not politically motivated but is technical in nature.

Now, this is an extremely unique situation, as the former CEA of India is now on record that India’s data is fudged, and not just in recent years but since 2011, including the period when he was in office. Hence, the article has an impact on the credibility and consequentially, ratings of the country. Earlier, there were rumblings of dissent and opposition to methodology and high growth rate figures by Arvind Subramanian which found a mention in the Economic Survey of 2016-17. The matter should have rested there, especially, when the statistical team from the IMF had visited India to examine the methodology and accepted the changes.

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