Year-on-year analysis of economic performance serves a very limited purpose

A year-on-year analysis is useful in a conceptual way as it accounts for the seasonal impact on the data, but it tells you next to nothing about the current state of the economy.

I was surprised a few days back to see a well-known, top economist tweet that the First Advance Estimates for GDP growth for 2021-22 has meant that India’s annual GDP growth over the last two years was a mere 0.6 per cent.

While he is technically correct, to give his interpretation importance would be quite unwise because measuring the progress of a post-crisis economy — against what it was pre-crisis — is not a great demonstration of neutrality.

After all, when you gauge the progress of the recovery from a heart attack, you do it from the day the person had the