Economic Advisory Council Rebuts Arvind Subramanian’s Low Growth Claims In Detailed Note On GDP Calculation Methodology

Economic Advisory Council Rebuts Arvind Subramanian’s Low Growth Claims In Detailed Note On GDP Calculation MethodologyFormer chief economic adviser Arvind Subramanian (Mohd Zakir/Hindustan Times via Getty Images)

In an extensive rebuttal to the academic paper of former chief economic advisor Arvind Subramanian which asserted that India’s GDP growth had been substantially overestimated by successive governments, the Economic Advisory Council (EAC) to the Prime Minister has released a note clarifying the methodology of calculating the country’s GDP.

It explains that the switch to a new methodology in 2015 which took 2011-12 as the base year led to two notable improvements , the first being the inclusion of the MCA21 database in GDP estimation, while the second was the implementation of the recommendations of the internationally recognised System of National Accounts (SNA), 2008.

The note states that Subramanian cherry-picked data to meet his conclusion that country’s GDP was being overestimated from 2011-12 onwards. It asserts that on the other hand he overlooked important inputs such as tax collection data citing salient changes in the tax regime.

It is argued that most of the 17 indicators Sumbramanian used in his paper to claim GDP mis-estimation were directly sourced from the Center for Monitoring Indian Economy, which is a private agency that itself gathers information from a multitude of different places, and is not a primary source of information.

In his academic paper entitled, “India’s GDP Mis-estimation: Likelihood, Magnitudes, Mechanisms, and Implications”, the former chief economic advisor had claimed that the India’s GDP growth rate between 2011 to 2017 was actually closer to 4.5 per cent rather than 7 per cent as stated by the official figures.