IMF team to get a fix on new GDP method

Besides base year, new series incorporates numerous other changes to make it more in sync with global best practices

The International Monetary Fund (IMF) will soon send a team to India to get a grasp of the implementation of the government’s new GDP methodology, questioned in certain quarters, including the Reserve Bank of India.

IMF’s Director for Asia Pacific Department, Changyong Rhee, said the change in the methodology was a “welcome move by India” and in line with what the multilateral lending institution had suggested.

A delegation will be sent to India “to discuss and understand the implementation of this methodology”, Rhee said.

Earlier this year, India changed the way it measures its GDP or economic output and revised its economic growth estimates accordingly.

Besides change in the base year, the revised national accounts series incorporates numerous conceptual and methodological improvements to make it more consistent with international best practices.

However, the revised data have been termed as "puzzling" by a number of experts and policymakers alike while the Reserve Bank of India (RBI) had also sought clarity from the government on the new methodology and the revised figures.

Chief Economic Advisor Arvind Subramanian, who had also served previously at IMF, last month termed the revised GDP growth figures as a "puzzle" and said the numbers have been "bumped up" and it was a mystery how to interpret them.

The upward revision to GDP figures has also been questioned by RBI Governor Raghuram Rajan, and most recently by a parliamentary panel.

In a report on India published in March, IMF had said the country has improved the way it measures economic output and raised its growth forecast for India to 7.5 per cent for 2015-16, after taking into account the revised figures.

IMF had said at that time that it would "continue to examine the improved GDP methodology and its implications for its growth forecasts, and further details on the compilation methodology will enable a deeper understanding of India's near-term and medium-term growth".