Economy

Now, 'New' Official GDP Math Says Growth Under UPA Was Actually Slower Than Recorded

An estimate put out by the National Statistical Commission earlier this year, however, had claimed the exact opposite.

New Delhi: The Indian economy grew slower during the UPA years than was earlier recorded, according to the new official gross domestic product (GDP) back-series data that was released by the Modi government on Wednesday.

According to the new data, which uses a different base year methodology, India grew at 8.5% in 2010-11 and not 10.3% estimated earlier. And in 2007-2008, the economy grew at 7.7% and not the 9.8% calculated earlier.

In January 2015, the Central Statistics office changed the method by which it calculated GDP by changing the base-year for calculation from 2004-2005 to 2011-2012. All growth data that was released from 2015 onwards used the new methodology.

What the Centre has delayed in releasing is what economists call ‘back series data’,which is essentially calculating what India’s GDP growth would have been before 2015 (before it changed the way it calculated growth) using the new methodology.

The back-series data released by the CSO on Wednesday now sharply revises downwards the growth recorded during the UPA years.

Niti Aayog chief Rajiv Kumar said the new data released for 2004-2012 based on the 2011-2012 base year is a “significant improvement both for coverage and methodology”.

Table 1: Official Back-Series Data

Year GDP Growth (Base 2004-2005) GDP Growth (Base 2011-2012)
2005-06 9.3% 7.9%
2006-07 9.3% 8.1%
2007-08 9.8% 7.7%
2008-09 3.9% 3.1%
2009-10 8.5% 7.9%
2010-11 10.3% 8.5%
2011-12 6.6% 5.2%

Earlier NSC estimate

The new official back-series data however diverges significantly from estimates put out by a sub-committee constituted by the National Statistical Commission (NSC) earlier this year. The NSC comes under the ministry of statistics.

At the time, the NSC committee’s estimates created a political uproar, with the report being taken down and then re-uploaded with a disclaimer. The ministry said that the methodology used for calculating the new numbers would be fine-tuned through further consultation. 

“It is clarified through this press note that the methodology for back-casting GDP series has not yet been finalised and various alternative methods are being explored,” the statistics ministry said in a press release at the time.

The NSC’s back-series estimates, which can be seen in the table below, showed that the Indian economy grew in double digits twice during Manmohan Singh’s tenure as prime minister.

Table 2- NSC’s Unofficial Back-Series Estimates 

Year GDP Growth (2011-12 baseline, market price)
2004-05 8.15%
2005-06 9.60%
2006-07 9.70%
2007-08 10.23%
2008-09 4.15%
2009-10 8.84%
2010-11 10.78%
2011-12 6.96%
2012-13 5.46%
2013-14 6.39%
2014-15 7.2%
2015-16 7.6%
2016-17 7.1%
2017-18 6.7%

Source: MOSPI, Report of the Committee on Real Sector Statistics

Niti Aayog’s Kumar  pointed out in a press conference that both methods, the ones used by the NSC and the CSO, are not comparable.

“The methodology used to back-cast the new series data now is different from the method used by the statistical commission,” said the think-tank’s vice-chairman. “The two are not comparable.”

He also added that the earlier GDP series consistently over-estimated the contribution of the services sector and that now there is a “much better handle” of value-addition in each sector.

Under the NSC’s estimates, average growth during the UPA-regime (2005-2014) was 8%, while the NDA-II government (2014-2018) was 7.3%.

With the new official data put out by the CSO on Wednesday, the UPA’s average GDP growth is at 6.7% while the average recorded growth under the NDA-II  is at 7.3%.

According to economic experts, the government’s estimates for reduced growth rates from 2004 to 2012 comes from an estimation of lower growth in the unorganised sector during that time period, and that this has now been captured through better estimation of trade data using sales tax figures.

“By and large, one methodology does not apply to every sector and this is the correct way to do it. But having said that, what I am concerned about is that for the entire period from 2004-05 to 2011-12, for all the sectors, the growth has been scaled down,” Pronab Sen, former chief statistician of India told Mint.  “I don’t know how this systematic scaling down has been done. It was expected for the tertiary sector but not for the secondary sector,” he added.