CSO estimates overstate GDP: analysts

  • The Central Statistics Office’s GDP figures released recently overstates the extent of growth, according to analysts
  • Analysts found that correcting the CPI- & WPl-prices mix in the deflators, giving them equal weights, suggests India’s

Gross Value Added (GVA) grew 6.2% in the Jan-March quarter, slower than the official estimate of 7.4%

  • The main issue is that not all of the growth that the figures show is on account of real growth o Much of it is purely on account of the increase in prices, which ought to have been deflated out adequately o The gap in the methodology arose from the use of smaller-than-appropriate weights for CPI inflation in the GDP deflators. Hence price changes that boost nominal earnings are being ascribed to real growth o Input prices are falling more than output prices, boosting the nominal margins, & inflating much of the valueadded in the manufacturing sector. In the absence of adequate deflation, manufacturing growth was exaggerated o Similarly, inadequate deflation also affected the way tax changes were incorporated into the GDP data. It led to overestimation of taxes, which drove the GDP well above the GVA
  • GDP is calculated as a sum of GVA & indirect taxes from which the value of product subsidies is deducted
  • The difference in the GDP & GVA growth estimates was striking; it widened to 0.4% from 0.1% in the previous financial year. Separately, data show that contraction in exports is slowing

High levels of “discrepancies” in the GDP numbers for 2015-16

  • Chief Statistician admitted to “discrepancies” in the GDP data & said that the govt is making efforts to minimise them. The recently released GDP figures showed that the discrepancies soared to Rs 2.14 lakh cr in 2015-16 or up to 1.9%, as against (-)Rs 35,284 crore in the previous fiscal
  • ‘Discrepancies’ in the statistical GDP data refer to the difference in national income under production method & expenditure method
  • Some discrepancies in national accounts will always be there bcz of delay in reporting of information by various agencies including state govts but the effort is to report data as accurately as possible
  • The govt is making efforts to minimise discrepancies in computation of the national income or GDP data by relying more on data available under e-governance programmes & corporate accounts

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