CEA Anantha Nageswaran: 'We don’t hear too many murmurs when GDP data disappoints'

Refuting concerns about the overestimation of economic growth estimates, Chief Economic Adviser V Anantha Nageswaran on Tuesday said such questions are not asked when gross domestic product (GDP) growth is on the lower side.

His comments come after the economy grew at 8.2% in the second quarter of the fiscal year, which was much higher than was expected, with some questioning the quality and reliability of the data.

“In general, we don’t hear too many murmurs when GDP data disappoints,” he said at the Pre-Release Consultative Workshop on base revision of the consumer price index, index of industrial production and the GDP.

He noted that when the Indian statistical authorities reported a 25% contraction, nobody got up to question the methodology, the reliability of the numbers, the single deflator being used, all of them were “kosher”.

He also highlighted that India does not use several questionable methodologies that developed countries follow, like chain price indices.

Addressing the conference, he also noted that the informal sector in India may be lower than what is estimated due to the nature of Indian businesses and their accounting practices.

“Since Indian businesses predominantly are sole proprietorships and small limited partnerships, the separation of books of accounts by individual business owners between personal and professional activities is quite blurred,” he said. If anything, India may be overestimating the extent of informality, simply because many people in these small businesses do not make the distinction between personal books of account and professional books of account, he added.

This is, however, outside the purview of the Ministry of Statistics and Programme Implementation, he said, adding that it would require a lot of teaching and learning for small businesses.