Former Chief Statistician of India TCA Anant deflected criticism of the divergence between key economic indicators and the back-data for GDP growth as measured by the new series.
The gross value added is linked to credit growth in the early estimate. But once the full accounting data is available, GVA is calculated based on that, Anant explained during a conversation with BloombergQuint. “So that disconnect will be there.”
The statistical commission's study had led the United Progressive Alliance to claim that growth under its administration was higher than under the National Democratic Alliance's rule. The government, however, dismissed that saying the estimates are not official.
As measured by the new series, the average growth rate during the UPA-II regime between 2008-09 and 2012-13 was at 6 percent. The average growth rate in subsequent five years under the NDA stands at 7.12 percent. The peak growth rate of over 10 percent under the UPA has also moderated to a more modest 8.5 percent. The highest growth rate under the NDA was marginally lower at 8.2 percent in 2015-16.
“Primarily, in financial services, the difference between the 2004-05 and the back-casted series is on account of the treatment of the central bank and not very much else,” Anant said. When it comes to investment, he said, there's a basic different between an output cycle and an investment cycle, which leads to inconsistencies.
“In a business cycle, investment picks up only towards the latter half of the business cycle. The first half of the business cycle is usually consumption led.”
Watch the entire conversation here
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