'Methodology is very robust': Former statisticians back GDP base year revision

Base year revisions and updation of methodology tend to impact past estimates as well, and it is not the first time that the questions have arisen over GDP estimates following such an exercise. Even previous exercises for revision of base years and changes in methodology led to a significant review of estimates.

Official GDP estimates released on August 3 revealed that the economy grew by 7.8% in the first quarter of the fiscal year despite the West Asia war. On September 2, the government also defended the data and underlined that all data sources used are in the public domain.

Experts and economists also highlight that newer data sources come into play with each base revision exercise that helps to better assess economic activities.

Don't Miss: ‘Painful to hear allegations of data jugglery’: MoSPI secretary Saurabh Garg says every data is verifiable

For instance, in the new base revision exercise, fresh data sources like those from the Periodic Labour Force Surveys and Annual Survey of Unincorporated Sector Enterprises as well as data from Goods and Services Tax, Public Finance Management System (PFMS), E-vahan, which are more comprehensive and available at a shorter time lag, are also being used.

Former Chief Statistician TCA Anant said that the latest exercise for GDP base year revision has been a very good effort, using a variety of data sources. "This base year revision has been a comprehensive exercise, and the methodology is very robust," he said.

Anant, who oversaw the last base revision, further noted that while the GDP growth rate is always the headline number, the absolute GDP numbers have several implications and are computed with a considerable degree of seriousness.

"Whenever there is rebasing, there are some changes in the estimates," he said, adding that no government wants estimates to go down as it also has implications for targets like fiscal deficit, which then have to be reviewed afresh.

Ashish Kumar, former DG, CSO, who is President, Center of Data for Economic-Decision making & Chief Statistician, Pahle India Foundation, also underlined the robustness of the methodology of the new series of GDP.

"Any criticism is baseless. The numbers that MOSPI has given are based on the latest available data," he said, adding that there have been significant revisions in previous exercises also.

Kumar further said that GDP should be taken only as a measure of economic activity and not as an indicator to assess employment or welfare of the citizens.

For instance, the base year revision of GDP with the base year 2011-12 from 2004-05, which was released in January 2015, had revealed a significant change in growth estimates as well as later in the back series.

The 2011-12 GDP series had revised the real growth estimate to 6.9% for FY14 as against 4.7% that was estimated earlier.  Similarly, GDP growth for FY13 had been revised upwards to 5.1% in the new series from 4.5% earlier.

The base revision exercise in 2004-05 had also led to a revision in growth estimates when GDP growth was revised upwards to 9.2% for FY07 from 9% in the earlier series. Not surprisingly, each of these exercises had led to questions over the methodology for the estimation of national accounts.