Saying it like it is

A fresh round of political acrimony has broken out over the country’s GDP statistics after the report of the Sudipto Mundle committee on real sector statistics was put out by the Ministry of Statistics and Programme Implementation (MoSPI) last week. The report, using the production shift method, makes a long-awaited attempt to arrive at a back-series estimate for India’s new GDP series (base year 2011-12) that the CSO has been using since 2015. The data show that India’s GDP growth rate topped the 10 per cent mark twice under the UPA regime, with average growth under the two UPA terms turning out higher than that under NDA. UPA spokespersons, who were so far heaping scorn on the new series, have promptly latched on to this back data to claim that India had a ‘golden run’ between FY06 and FY08 and that they had bequeathed a healthy economy to the NDA. The government, on its part, has been prompt to disown the data by stating that the Mundle methodology was ‘experimental’ and not yet ‘finalised’. The report seems to have vanished from the MoSPI site.

An impartial look at the new GDP estimates at market prices suggests that India had its share of good and bad patches under both the UPA and NDA regimes, with neither displaying a Midas touch with the economy. In the first four years of UPA-I, India enjoyed boom times, with its GDP growth accelerating from 8.1 per cent to 10.2 per cent between FY05 and FY08. But given that this period was marked by a liquidity-fuelled growth bubble for much of the world, the credit for this cannot go to the UPA alone. That India’s GDP growth collapsed to 4.1 per cent in FY09, immediately after the global financial crisis hit, is proof of this. UPA-II, after managing to resuscitate growth to 10.8 per cent in FY11 through stimulus measures, contended with rapidly deteriorating macros in its final leg (FY12 to FY15) as the impact of high twin deficits and reckless bank lending to distressed businesses, came home to roost. The NDA, which mended these deficits and oversaw a reviving economy in FY15 and FY16, put it back on the sickbed with its demonetisation misadventure. Growth has been edging back towards 8 per cent in the last two quarters.

In short, the GDP trajectory plotted by the Mundle committee appears quite plausible and it is unlikely that a very different picture on the economy will emerge with alternative methods of back-casting. Therefore, the best course of action for the Modi government would be to stop being defensive about this report, and to instead welcome the fact that CSO’s new series has gained renewed credibility. There can be little doubt that India’s GDP data sorely needed a back-casting exercise, as global agencies and researchers were hard-pressed to attempt any analysis of the long-term trajectory of the Indian economy without historical data.

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