Chief Economic Advisor Krishnamurthy Subramanian appointed as member of Advisory Council of 15th Finance Commission
Economic Advisory Council to the Prime Minister on Wednesday refuted the claim by former Chief Economic Adviser Arvind Subramanian that the gross domestic product (GDP) growth rate was overestimated by 2.5 per cent between 2011-12 and 2016-17.
It is worth noting that the base year of India's income calculations shifted to 2011-12 on the basis of recommendations of several committees with experts in National Income Accounting, said a statement from the Economic Advisory Council.
"It was on the basis of these recommendations, started in 2008, that the government implemented the change from January 2015. Therefore, it is wrong to suggest that the views of experts have not been taken into account while changing the base year or weights or switching from Annual Survey of Industries (ASI) to Ministry of Corporate Affairs (MCA) 21," it said.
The statement added that Subramanian used cross-country regressions to estimate what India's GDP should be.
"Using cross-country regressions to estimate GDP is a most unusual exercise, as is the suggestion that any country's GDP that is off the regression line must be questioned. The proxy indicators that he used can also be questioned. Nor does this exercise allow for GDP increases on the basis of productivity gains. A country's GDP is in nominal terms and any exercise should be on the basis of nominal figures, not real growth rates," the statement said.
The council will now examine in detail the estimates made in Subramanian's paper and come out with a point-to-point rebuttal in due course.
"At the moment, it is felt that any attempt to sensationalise what should be a proper academic debate is not desirable from the point of view of preserving the independence and quality of India's statistical systems, all of which the former CEA is familiar with," the statement said.
"These are certainly issues that Subramanian must certainly have raised while he was working as CEA, though by his own admission, he has taken time to understand India's growth numbers and is still unsure," it added.
Earlier, the Ministry of Statistics and Programme Implementation (MOSPI) had said that India's GDP estimate is based on global standardisation.
"Reports have appeared in a section of media citing Dr Arvind Subramanian as regards overestimation of India's GDP growth, primarily based on an analysis of indicators, like electricity consumption, two-wheeler sales, commercial vehicle sales, etc., using an econometric model and associated assumptions," said the statement.
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