Govt defends methodology to measure financial development after former CEA Arvind Subramanian’s remark, says adopted world practices
The Ministry of Statistics and Programme Implementation (MoSPI) additionally added that its projections of the Gross Domestic Product (GDP) development are broadly consistent with estimates of assorted nationwide and worldwide businesses.
Subramanian has deduced that India’s financial development price has been overestimated by round 2.5 proportion factors between 2011-12 and 2016-17 resulting from a change in methodology for calculating GDP.
India’s GDP development price between this era ought to be about 4.5 p.c as a substitute of the official estimate of near 7 p.c, he stated in a analysis paper revealed at Harvard University.
“India changed its data sources and methodology for estimating real GDP for the period since 2011-12. This paper shows that this change has led to a significant overestimation of growth,” he stated within the paper.
The MoSPI stated Subramanian’s overestimation of India’s GDP development is based on an evaluation of indicators, like electrical energy consumption, two-wheeler gross sales, business automobile gross sales utilizing an econometric mannequin and related assumptions.
“The estimation of GDP in any economy is a complex exercise where several measures and metrics are evolved to better measure the performance of the economy,” the MoSPI stated.
With any base revision for GDP estimation, as new and extra common information sources turn into obtainable, you will need to word that “a comparison” of the previous and new collection usually are not amenable to simplistic macro-econometric modelling, it stated.
It may additionally be seen that the GDP development projections introduced out by numerous nationwide and worldwide businesses are broadly consistent with the estimates launched by MOSPI.
“The GDP estimates released by the Ministry are based on accepted procedures, methodologies and available data and objectively measure the contribution of various sectors in the economy,” it added.
The ministry harassed that with structural adjustments going down within the financial system, it’s essential to revise the bottom 12 months of macroeconomic indicators like GDP, Index of Industrial Production (IIP), Consumer Price Index (CPI), periodically to make sure that indicators stay related and replicate the structural adjustments extra realistically.
Such revisions not solely use the newest information from censuses and surveys, however in addition they incorporate data from administrative information which have turn into extra sturdy over time.
In India, the Base Year of the GDP Series was revised from 2004-05 to 2011-12 and launched on January 30, 2015, after adaptation of the sources and strategies consistent with the System of National Accounts 2008 (2008 SNA).
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