Arvind Subramanian's growth estimates omit productivity, quality, says CII

'The growth estimates shown by former CEA omits productivity and quality and takes only volume into account,' said CII's Chandrajit Banerjee

Joining the debate on overestimation of the GDP, industry chamber CII Wednesday said growth estimates shown by former CEA Arvind Subramanian have omitted productivity and quality and are based on only volume.

In a research paper, Subramanian, who stepped down last year, has said India's economic growth rate has been overestimated by around 2.5 percentage points between 2011-12 and 2016-17 due to a change in methodology for calculating GDP.

Subramanian's paper titled 'India's GDP Mis-estimation: Likelihood, Magnitudes, Mechanisms, and Implications', published at Harvard University, also comes at a time when concerns have been raised in various quarters about the official economic growth numbers.

Commenting on the paper, CII Director General Chandrajit Banerjee said the Indian economy is a complex one and cannot be captured by just a few indicators.

"The growth estimates shown by former CEA omits productivity and quality and takes only volume into account. GDP data has to take a more robust and comprehensive approach where all growth drivers are included," Banerjee said.

For instance, agriculture, which is one-sixth of the Indian economy, has not been included in the study. Moreover, the service sector, which accounts for more than 50 per cent of GDP, has been inadequately represented.

Specifically, IT and telecom sectors which have been the most dynamic parts of the economy in the recent years have been missed out while many infrastructure sectors like rural roads that have posted double-digit growth for several years are missing in the report, Banerjee said.