Niti Aayog chief disputes higher GDP growth under UPA
20 August 2018
Niti Aayog Boss Rajiv Kumar has refuted claims that economic growth was higher under the earlier UPA government stating that the estimates are only experimental and not officially approved.
In fact, he said, GDP growth rate under the current NDA government is much higher. "Growth rate under four years of Modi government is still higher than the growth rate of last four years of UPA. This is being managed despite the pernicious legacy of massive NPAs, de-leveraging of commercial bank credit and uncertain global trade environment".
Rajiv Kumar took to Twitter to justify the growth seen under Modi government in the past four years. Strong foundations have been laid for "sustained high and inclusionary growth" for the future during the past four years, he added.
"Growth rate under four years of Modi government is still higher than the growth rate of last four years of UPA. This is being managed despite the pernicious legacy of massive NPAs, de-leveraging of commercial bank credit and uncertain global trade environment," Kumar said on Twitter.
Referring to a report by sub-committee of the National Statistical Commission (NSC) on real sector statistics which reportedly claimed that going by revised GDP measures, the economic growth touched double digits - 10 per cent - during UPA rule in 2006-07, Kumar in a series of tweets tried to clear air about these figures.
Media reports citing a report of NSC sub-committee said the average economic growth rate was 8.87 per cent during UPA's first term in 2004-09. This fell to 7.39 per cent during its second term in 2009-14. The report further said that in comparison to the UPA, the average growth rate during NDA's first four years (2014-18) was 7.35 per cent (See: New back series data shows India's GDP grew fastest under UPA).
"Reference this morning's news report about NSC sub-committee's estimates of GDP growth series with 2011-12 base. These are yet unofficial. However, the following facts are clear: Higher growth rate in 2009-2011 and in previous years was funded by untenable fiscal deficit and reckless expansion of commercial bank credit which was surely unsustainable. This led to a dramatic economic collapse and growth floundered spectacularly in last 3 years of UPA II," Kumar said.
This, he said, was reflected in Mundle Committee's estimates of the back series as well. "7.05 per cent in 2011-12; 5.42 per cent in 2012-13; and 6.05 per cent in 2013-14. India was branded as part of the Fragile 5. Rupee's exchange rate went into a free fall during May-August 2013, declining almost 25 per cent in 4 months," he tweeted.
He also pointed out that the highest ever growth rate during 1987-89 Rajiv Gandhi period was also debt funded and led to the disastrous collapse of economic growth in 1990-92.
"Likewise, highest ever growth rate during 1987-89 Rajiv Gandhi period was also debt funded and led to disastrous collapse of growth in 1990-92 and the unmitigated external account crisis that forced India to physically transfer its gold reserves to avoid a debt service default," Kumar said.
The ministry of statistics and programme implementation, meanwhile, clarified that the change of base year to calculate macro-economic indicators are a normal activity which is periodically undertaken. This is in line with the global effort in the G20 and other fora to capture economic information accurately and to analyse the changing structure of the economy. While undertaking revisions, it is also a global statistical practice to continuously identify and tap new data sources in the economy which have wider coverage and where data is available regularly.
The ministry of statistics and programme implementation (MoSPI) has revised the base years of the gross domestic product (GDP) and the Index of Industrial Production (IIP) to 2011-12 and for the Consumer Price Index (CPI) to 2012.
For the National Accounts estimates, the new series is a structural breakaway from the old series, as it includes information sources which have newly become available or are more regular than the earlier ones.
For instance, information on the corporate sector was taken from ministry of corporate affairs MCA-21 database.
For the compilation of a linked series, the standard methodology used by CSO is the splicing method and reworking the estimates as per the current series methodology at the component or detailed item level. CSO, in the past, has adopted the following broad guidelines for the compilation of linked series. For the years from the last base (2004-05) to the current base (2011-12), the components are re-estimated by following the same procedure as for the new series of NAS.
For the years prior to previous base year (2004-05), the estimates are prepared by using the splicing technique. This implies that there would be no change in the growth rates of aggregates for the same years between the old series and new series. For back casting the series till 2004-05, various alternatives are being worked out and the back series will be finalised and released after due consultation with Advisory Committee on National Accounts.
The National Statistical Commission gives overall guidance to the ministry of statistics and programme implementation in undertaking all statistical activities based on priorities and resource availability. The then chairman, NSC, constituted five committees to examine in-depth the issues facing various sectors of the economy and the measures needed to be taken, including use of modern technology for addressing these challenges. The committees formed included:
· Committee on Real Sector Statistics;
· Committee on Online Reporting Systems;
· Committee on Analytics;
· Committee on Financial Sector Statistics; and
· Committee on Fiscal Sector Statistics.
These committees had detailed discussions with experts and after deliberations, finalised their reports and presented them to the National Statistical Commission in July 2018. The Committee on Fiscal Sector had not submitted its report. The NSC, in its meeting held on 16-17 July 2018 decided to place these reports on the website of MoSPI for wider consultation.
The Committee on Real Sector Statistics also looked at the issue of data challenges in bringing out the back series of GDP (Base 2011-12) as several new sources had been used in the current series which were not available or not reliable in the earlier series (Base 2004-05).
The committee approached the data challenges using different approaches. Three possible approaches were considered for generating the back series. One approach was broadly based on the new GDP methodology by using the base data wherever available. Another method was based on production shift approach. A third approach was to project the old series using the base year 2004-05 forwards up to, say, 2014-15, then adjust it to the 2011-12 base by comparing it with the new series.
The committee used the production shift approach and came out with some experimental results to see how the approach compares with the earlier series. Thus the estimates in the report are not official estimates and are meant only to facilitate taking a decision on the appropriate approach.
These recommendations of the NSC committees will be examined by MoSPI and other experts for deciding on the appropriate methodology to be adopted for generating the back series estimates for each sector. The Advisory Committee on National Accounts Statistics will be deliberating on the back series estimates before finalising the same for continuity, consistency and reliability.