GDP Back Series Throws Up Yet Another Set Of Growth Trends

Trends thrown up by the official back-data suggest that the old series under-estimated the impact of the global financial crisis on the Indian economy.

(Photo: iStock)

The debate over economic growth in past years and under previous administrations continues, with the government now releasing official back-data for GDP growth as measured by the new series.

India’s statistical office shifted to a new GDP series, with a base year of 2011-12, in 2015.

Since then, a niggling question has been whether data points under the old series and new series are comparable. And what the long-term growth trajectory of the Indian economy has been.

The official back-data for this new series was released in a joint press conference by the NITI Aayog and the government’s statistical office on Wednesday, 28 November. The data is not comparable to a study conducted by the National Statistical Commission released in August.

“The methodology used to back-cast the new series data now is different from the method used by the statistical commission,” said Rajiv Kumar, vice chairman of the NITI Aayog. “The two are not comparable.”

Trends thrown up by the official back-data suggest that the old series under-estimated the impact of the global financial crisis on the Indian economy. It also over-estimated the rebound from the crisis.

• According to the new series, growth in 2008-09 plummeted to 3.1 percent compared to the old series estimate of 3.9 percent.
• In 2009-10, GDP growth was at 7.9 percent as per the new series as compared to the 8.5 percent estimated under the old series.
• In 2010-11, the new series shows growth at 8.5 percent compared to the estimate of 10.3 percent under the old series.

The official data released on Wednesday, 28 November, diverges from the draft release put out by the statistical commission in August.

That release had suggested growth of 10.78 percent in 2010-11 – the highest seen since 1994-95.

Speaking at the press conference, Kumar dismissed the methodology used by the statistical commission saying that it was not the “right way” to back-cast the data.

GDP Growth: Old Series vs Backdata of New Series.(Photo: BloombergQuint)

Growth Under UPA vs NDA

The statistical commission’s study had led the United Progressive Alliance to claim that growth under its administration was higher than under the National Democratic Alliance’s rule. The government, soon after the release of that report, dismissed this saying the estimates presented in the statistical commission’s report are not the official estimates.

The latest, and now official, back-series tilts the political debate over growth back in favour of the NDA.

Going by this data release, the average growth rate during the the UPA-II regime between 2008-09 and 2012-13 was at 6 percent. The average growth rate in subsequent five years under the NDA is 7.16 percent.

The peak growth rate of over 10 percent under the UPA has also moderated to a more modest 8.5 percent. The highest growth rate under the NDA was marginally lower at 8.2 percent in 2015-16.

Politics of GDP Debate(Photo: BloombergQuint)

(Published in an arrangement with BloombergQuint)