CEA Anantha Nageswaran: “We don’t hear too many murmurs when GDP data is disappointing”

Refuting concerns over overestimation of economic growth estimates, chief economic advisor V Anantha Nageswaran on Tuesday said such questions did not arise when gross domestic product (GDP) growth was low.

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

“We generally don’t hear a lot of murmuring when GDP data is disappointing,” he said at the pre-release consultative workshop on the basic revision of the consumer price index, industrial production index and GDP.

He noted that when Indian statistical authorities reported a 25% contraction, no one questioned the methodology, the reliability of the figures, the only deflator used, all were “kosher”.

He also pointed out that India does not use several questionable methodologies that developed countries follow, such as chain price indices.

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

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

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