NEW DELHI: Union finance minister Arun Jaitley on Thursday defended the revision in India’s GDP growth rate during the previous UPA era, saying it was done by a “highly credible” organisation, the Central Statistics Office, which maintains an arm’s length distance from the finance ministry.
He said the revised numbers, based on a new formula with 2011-12 as the base year, are globally more comparable as they take into account a far greater representation of the Indian economy and are more reflective of its real state.
Row erupts as new GDP data slashes growth rate in UPA era
Taking on opposition Congress for criticising the revision, he said the Congress had welcomed the upwards revision in growth numbers of the last two years of the UPA regime by the same CSO and had gone to the extent of saying that the “the new GDP series has concludedly established that we did not mismanage the economy”.
Later in a blog post, Jaitley said the revised economic growth data has taken away Congress party’s last surviving argument “my GDP growth was higher than yours”.
A day after Chief Statistician Pravin Srivastava, in an unusual move, announced the revised numbers based on back series data alongside Niti Aayog Vice Chairman Rajiv Kumar, Jaitley said, “I don’t think any service is being rendered by people who choose to discredit a highly credible organisation like the CSO because its data is based on facts and the revised formulations, (and it is) a continuous exercise because every time you try and improve upon the formulations to make them more representative of the real state of economy.”
The new numbers show India’s economic growth rate averaged 6.7 per cent during the Congress-led UPA regime as compared to 7.3 per cent under the present government. Previous numbers had put the average growth rate during the 10-year UPA rule at 7.75 per cent.
The finance minister said what was welcomed by the UPA in 2015 is now being criticised because the GDP growth has been revised downwards.
“The CSO is a highly credible organisation, it maintains an arm’s length distance from the finance ministry,” he said. “In fact, we also come to know of the data only when it is released. All former individuals and eminent people who headed the CSO are of the same opinion that this data is far more inclusive and far more reflective of the situation of Indian economy and therefore has far greater credibility.”
Former finance minister P Chidambaram had on Wednesday called the revision a “bad joke.”
“Niti Aayog’s revised GDP numbers are a joke. They are a bad joke,” he had tweeted. “Actually they are worse than a bad joke. The numbers are the result of a hatchet job.”
Responding to the criticism, Jaitley in a blog titled ‘When the Data Speak’ said CSO has global credibility and no one in India has ever imputed motives to it.
“Once the new GDP estimates were given, my predecessor Shri P. Chidambaram publicly welcomed the new series. He said ‘the new data successfully establishes the fact that UPA succeeded to revive the economy. The revised GDP data will end misconceived charges that UPA mismanaged the economy’ (3rd February, 2015),” Jaitley recalled.
The finance minister said the CSO Wednesday published figures working backwards on applying the new GDP series.
“It was in February 2015 that the CSO worked on a new formula with 2011-12 as the base year and the new GDP series was announced. At that time, they had revised the new GDP series from 2012-13 onwards. Since then, all GDP data whether quarterly or annual have been based on new series.
“This new series is globally more comparable, it takes into account a far greater representation of the Indian economy and is more reflective of the real state of Indian economy,” he said.
He said that in 2015, the CSO revised the GDP growth of the last two years of the UPA — 2012-13 and 2013-14. “Curiously at that time the revision had made the GDP growth move upwards. So there was an improvement in those 2 years. At that time, it was welcomed by the people in the then government. In fact, they said that the new GDP series has concludedly established that we did not mismanage the economy,” he said.
He further said the sooner the Congress Party realises that its policy paralysis pushed India into the Fragile 5, the better it will be for the Party and its leadership.
Jaitley said when the new series is in place, it has to be used as a basis for backward revision and so what was revised from the year 2011-12 onwards is now being revised from 2004-05.
Jaitley said the formula is the same.
Recalibrating data of past years using 2011-12 as the base year instead of 2004-05, the CSO estimated that India’s GDP grew by 8.5 per cent in the financial year 2010-11 (April 2010 to March 2011) and not at 10.3 per cent as previously estimated.
Similarly, 9.3 per cent growth rate each in 2005-06 and 2006-07 was lowered to 7.9 per cent and 8.1 per cent, respectively, while 7.7 per cent rate was now estimated for 2007-08 instead of 9.8 per cent.