The following story is, in all probability, untrue:

During the peak of her popularity in the early seventies, Indira Gandhi was touring one of the most backward districts of the country. As usual, thousands of people from age 8 to 80 thronged the roads to cheer lustily and greet her. Reacting to the enthusiastic response of her admirers, she turned to her aide and asked, "How do say that 70 per cent of the population is below the poverty line when I see so many bright and cheerful faces here?"

The aide cut short his tour and flew back to Delhi to meet the mandarins in the government who handle the poverty line business.. Having done a masters in English, he was not much into number crunching and so he asked the mandarins to explain in simple terms how the poverty line was drawn.The mandarins explained that being above the poverty line implied being able to obtain at least 2400 calories of nourishment per day.

"Something seems wrong," said the aide. The mandarins were quick to explain that the figures had been drawn up statistically which also took into account a margin of error, which meant give or take 100 or 200 calories here and there." There appears to be an error in the margin of error," said the aide. "Take a re-look and get back to me," he said.

The mandarins went back to their list of definitions to re-look 'the margin of error.' Changes were made here and thereand a few weeks later, the government announced that the number of people below the poverty line had come down from 70 to 60 per cent.

Last week, the government announced that the country's gross domestic product (GDP) growth had crossed the double digit mark.

The following story is absolutely true - and truly misleading.

GDP is the basic value of goods and services produced within a country and is used to measure the income of a country. Gross indicates the over all value of the goods without taking in to account depreciation. Domestic indicates that the income is generated from resources within the country. The income could have been earned in foreign currency, so long as it was earned using resources located within the country. Product indicates that only the final value of goods and services are used in the computation. Intermediate goods and services are not considered and only the value of the end product is relevant.

Thus the computation of GDP has three basic components - personal consumption expenditure; gross private domestic investments and; government purchases.

Personal consumption expenditure denotes expenditure by individuals on durables and non-durables. Private investment constitutes investments by business and non-profit organisations in infrastructure, non-residential and residential buildings and equipment. The third is amply clear, the purchases made by the government.

GDP can be stated in four forms:
1. Nominal GDP: monetary value of goods and services produced,
2. Annualised GDP: Quarterly GDP x 4, to project annual GDP,
3. GDP adjusted to seasonal factors: GDP after elimination of seasonal and cyclical factors.
4. Real GDP: Inflation adjusted GDP.

The ideal GDP should be real GDP adjusted to seasonal and cyclical factors.

Last week, the government released its third quarter statistics for 2003-04 comparing the GDP growth with the quarter ending December 2002. As is well known, 2002 was an awful year for the Indian economy, which had suffered widespread drought for the second consecutive year. About seventy per cent of the population depends on agriculture, the mainstay of the Indian economy, which contributes almost 40 per cent to the country's GDP.

Therefore, a rise or fall in agricultural productivity has a significant impact on the GDP.

The agricultural growth for the quarter ending December 2002 was minus 9.8 per cent. The growth for the quarter ending December 2003 was compared to this minus 9.8 per cent and a whopping 16.9 per cent growth was arrived at which took the country's quarterly GDP growth beyond the magical 10 per growth, which any developing economy aspires for.

The 16.9 per cent growth has come about thanks to the bounty of the rain gods during the 2003 monsoons. As October to December is the harvest season, the maximum growth is usually registered in this quarter. Other activities like manufacturing and services have, no doubt, grown but their rate of growth indicates that, at best, an 8 per cent growth will be attainable for the year 2003 to 2004.

As mentioned earlier, the ideal GDP should be real GDP adjusted to seasonal and cyclical factors. It is evident that while computing the GDP this time, no adjustment has been made for seasonal and cyclical factors like the bountiful rains this year, as these would have cut in to the 'feel good' factor - under an overdose of which the nation is currently reeling - thanks to the forthcoming elections .