GDP measurement and the slowdown

Although there are some structural issues, the economy is slowing largely due to cyclical factors

Arvind Subramanian’s view that India’s Gross Domestic Product (GDP) was over-estimated after the 2011-12 base revision is being used incorrectly to argue the slowdown is likely to be recalcitrant and worse than it appears. Subramanian’s empirical results cover the period 2011-2016 and have been subject to widespread criticism to which there is no satisfactory response. We show his recent heuristic arguments to be equally unsatisfactory. Therefore, they cannot illuminate the recent period. The National Accounts Statistics (NAS) data shows a slowdown now and showed a slowdown continually in investment and exports, which was earlier countered by credit-fuelled consumption. 

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