The Economic Advisory Council (EAC) to the Prime Minister on Wednesday refuted the claims of former Chief Economic Adviser (CEA) Arvind Subramanian regarding overestimation of GDP numbers and said it will come out with a point-by-point rebuttal in due course. Subramanian, in a paper, 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.
India's gross domestic product (GDP) growth rate between this period should be about 4.5 per cent instead of the official estimate of close to 7 per cent, Narendra Modi government's former CEA said in the research paper, published by the Center for International Development at Harvard University.
"India changed its data sources and methodology for estimating real GDP for the period since 2011-12. This paper shows that this change has led to a significant overestimation of growth," he said. "A variety of evidence suggests that the methodology changes introduced for the post-2011 GDP estimates led to an over-estimation of GDP growth."
Manufacturing is one such sector where the calculations have been largely mismeasured, wrote Subramanian, who quit as the chief economic adviser in August last year before his extended tenure was to end in May 2019.
Stating that his research paper by no means was the final word given the impossibility for researchers to reproduce the detailed methodology underlying the GDP estimates, he said, "That said, the evidence is too broad and robust, the anomalies and puzzles too numerous, the magnitudes of over-estimation too large, and the stakes for the economy and country too high for this evidence not to be debated seriously."
The EAC will examine in detail the estimates made in Subramanian's paper and come out with a point-by-point rebuttal in due course, it said in a statement.
"At the moment, it is felt that any attempt to sensationalize 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," it said.
"These are certainly issues that Dr. 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", the EAC-PM added.
On Tuesday, the Ministry of Statistics and Programme Implementation (MoSPI) had said it follows accepted procedures and methodologies for arriving at projections of national income, while rejecting the contention of the former chief economic adviser (CEA).
(With PTI inputs)