Two ways to look at GDP

  1. Researchers and academicians have raised doubts about the new methodology employed by the Central Statistics Office(CSO) to estimate India’s gross domestic product(GDP).
  2. In 2015,CSO had introduced a new series of National Account Statistics. The new series made several changes to estimate India’s gross domestic product(GDP).In particular,it revised the base year from 2004-05 to 2011-12. 
  3. However,the debate intensified when CSO released two back-series data which means recalibrating the GDP data for past years based on the new methodology.But the released data contradicted each other.
  4. The first back-series presented by the National Statistical Commission (NSC) in July 2018 found that the average economic growth between 2005-06 and 2011-12 was 8.6% instead of the 8.3%.
  5. The second back-series calculated by CSO and published in November 2018 found this average to be just 7%.
  6. Further,former chief economic advisor(CEA) had said that India’s GDP growth in the period 2011-12 to 2016-17 is likely to have been overestimated.He said that the growth during that period was actually 4.5% rather than the 7%.
  7. However,several experts have countered former CEA.They have said that India’s nominal GDP growth rate has not changed under the old and new series data.Further,there was no consolidated Consumer Price inflation(CPI) before 2011.
  8. They have also said that GDP methodology is on par with its global standing while highlighting that former CEC had used 17 high-frequency indicators but ignored the representation of the services sector (60% in GDP) and the agriculture sector (18%) in the analysis.