The fresh delay in releasing GDP back-series data has raised doubts over whether growth was better under UPA.
New Delhi: Is the Narendra Modi government trying to hide the real gross domestic product (GDP) growth numbers during UPA rule just to avoid the embarrassment of better figures under the previous government before it faces elections next year?
That is the question making the rounds as the government has once again put off releasing the back-series data of GDP growth for years before 2011-12.
The Modi government, which took power in May 2014, announced a change in the way of calculating GDP in January 2015. To measure India’s economic activity better and comparable to the world, it changed the base year of national accounts to 2011-12 from 2004-05, in addition to the routine annual revision.
Base year refers to the benchmark year for calculating economic indices and is changed periodically. The government is now set to change the base year to 2017-18 from 2011-12 after completion of the household consumer expenditure survey and labour force data by the end of this year.
Following the 2015 change, GDP growth under the Modi government was seen to be impressive even though the economy was facing headwinds. But it also showed a sharp jump in GDP growth to 6.9 per cent in 2013-14 — the last year of the previous UPA II regime — as against earlier estimates of 4.7 per cent under the old series.
Faced with questions and criticism over the change, the government had promised that it would release comparable data for previous years as well.
The wait for the data, however, is not over yet as the release has been postponed more than once.
Sources in the Central Statistics Office (CSO), under the ministry of statistics and programme implementation (MoSPI), said the release of the back-series is likely over the next three months — probably by September. The earlier deadline was May, which was then postponed to mid-June.
Last month, MoSPI said in a statement that the 2011-12 GDP series incorporates data from the ministry of corporate affairs and this data source has been evolving over the years.
“For back casting the series till 2004-05, various alternatives are being worked out under the guidance of the Advisory Committee on National Accounts and the back-series will be finalized and released after due consultations with this expert committee,” it stated.
Change in series
India’s latest series of GDP data is available from 2011–12. GDP numbers for years before fiscal 2012 are available in the 2004–05 series and not the new 2011–12 series.
The revision of GDP data by the CSO in 2015 was not only on account of a change in methodology and base year but also the inclusion of new data.
Under the new methodology, the CSO measures GDP at market prices instead of factory costs, which allows the effect of any subsidy or indirect tax to be removed from the final measure. The GDP is thus now calculated by adding product taxes to gross value added (GVA) at basic prices and removing subsidies.
Several economists including former Niti Aayog vice chairman Arvind Panagariya had expressed their surprise at the UPA era numbers under the new methodology, prompting a government response. The finance ministry and the CSO had then said comparable revisions for the previous years, as far back as 2004-05, would be released by mid-2016.
The back-series has since been eagerly awaited as it is expected to place GDP growth before fiscal 2012 in the context of the growth under the Modi government.
Delay in data release
The delay in the release of the back-series data has become a topic of discussion among economists and statisticians, some of whom feel that the government is apprehensive about the political implications of releasing the back-series just ahead of the 2019 general elections, as it may throw a better picture of growth under the UPA.
Others dismiss this notion saying the delay is due to a lack of corporate data. The back series may show growth only under certain parameters in the UPA years and not on the aggregate, they add.
Pronab Sen, India’s first chief statistician, said the new data will most likely show a better picture of the Indian economy under the UPA regime. “The back-series data is likely to show better GDP growth in the years prior to 2014,” Sen told ThePrint.
Talking about the repercussions of delaying the back series, Sen said it will hurt the economy as it will affect trade and the manufacturing sector. “In the absence of relevant back data, it will be difficult to make future predictions,” Sen said.
Sen, who was associated with the formulation of the new series, also said there was some resistance from Niti Aayog to the release of back-series data.
However, Niti Aayog vice chairman Rajiv Kumar denied any resistance under him. “I don’t see why there should be any resistance from us. But, at the same time, there should not be speculation about the data before it is released,” said Kumar.
The delay could possibly be to avoid hurting market sentiment at this point of time, said a senior economist who spoke on condition of anonymity. “There could be other factors for the delay. They could be summarising or even working out some other method for calculating the data. It is difficult to say what they have on their minds right now,” the economist said.
Former RBI governor Bimal Jalan said it is imperative that the government releases the back-series data in time. “If they are withholding the data for some reason, there should be a clarification, or let people know the reasons for the delay instead of leaving room for speculation. The data is crucial for India to keep the competitive edge globally with other countries like China,” Jalan said.
A senior CSO official said growth figures will indeed show a bulge in the new series with exception of a few years. “For instance, the new series could show discrepancies in numbers of 2008-09 showing GDP growth of less than 2 per cent against the 6.7 per cent in the old series,” said the official who did not want to be identified.
Fiscal 2009 witnessed the subprime mortgage crisis which led to a global financial meltdown.
Former chief statistician T.C.A. Anant told ThePrint that the new series will be more volatile than the older one.
“It will capture the highs and the lows of the economy much better than the earlier series. So, on some parameters it would show the growth high, while on the others it may also show dull growth in previous years,” said Anant, who retired in January after working in the CSO for seven-and-a-half years.
The delay in the release of back-series data is due to a lack of corporate data for the years before 2011, he added.
Anant said that CSO must not come under pressure from researchers waiting for statistics to make predictions, and release half-baked data which can lead to bigger problems in the future.
Another CSO official agreed with Anant, saying the delay has primarily been on account of difficulty in sourcing data for companies for years before the launch of the MCA 21 database — corporate data with the ministry of corporate affairs.
“It is almost ready and will be released soon,” said Praveen Srivastava, additional director general at MoSPI, adding that the ministry has been collecting data for both the organised and unorganised sectors. “The new GDP series included MCA 21 data for companies, but it’s for years before the launch of MCA 21 that we have been facing difficulties in preparing the backp-series,” he said.
Reached for comment, P. Chidambaram, who was finance minister in the UPA government, said he could not speak without seeing the numbers.