House panel questions new GDP figures’ credibility
Questioning the credibility of new GDP figures, a Parliamentary panel on Friday said that it is not convinced about the figures which are showing a sudden jump in the growth rate of economy. Flaying the Statistics Ministry for its reply on this matter, the Parliamentary Standing Committee on Finance also said the reply on authenticity and creditability of new series is also "vague".
"The new series of national accounts with 2011-12 as base year has raised more questions than answers ... the reply of the ministry regarding authenticity and creditability of new series is also vague," the Parliamentary Standing Committee on Finance said in a report which was tabled in Parliament on Friday.
"The committee is not convinced regarding the credibility of the figures which are showing a sudden jump in the growth rate of various sectors of the economy including GDP growth rate from 1 per cent to 1.5 per cent, capital formation from -3 per cent to +3 per cent, which seem to contradict anecdotal evidence," the report said.
Chief Economic Advisor Arvind Subramanian and RBI Governor Raghuram Rajan, among others, had also questioned the new GDP series, saying the numbers were 'puzzling'. "I am puzzled as I said because the fact that ... especially what happened in 2013-14, that number is puzzling because that is a kind of bad year, yet growth accelerated," Subramanian had said in February.
"We do need to spend more time to understanding the GDP numbers," Rajan had said on February 3 after releasing the bi-monthly monetary policy of the central bank that retained the forecast of 5.5 per cent GDP (based on old method) growth in 2014-15. "We will be watching the February 9 release with great care and dwell deeply into what we see there. At this point this is premature to take a strong view based on these GDP numbers," he had said.
On the basis of new series with 2011-12 as base year, the the Central Statistics Office (CSO) under Statistics Ministry on February 9 estimated the real GDP growth at 7.4 per cent in 2014-15 and 6.9 per cent in 2013-14. The economic growth was pegged at 4.7 per cent for 2013-14 as per old series with 2004-05 base year. Similarly, growth rate for 2012-13 was revised upwards to 5.1 per cent, from earlier estimate of 4.5 per cent (on base year 2004-05).
The Parliamentary committee suggested the ministry to examine the possibility of revising the national accounts annually to pre-empt the kind of controversies and debates that being generated right now.
Slamming the Statistics Ministry for 'poor' financial performance, the committee has also asked it to put its own house in order before doing cost and time overrun analysis of project implemented by other ministries. "Such a casual financial performance by the ministry, whose primary responsibility is to monitor and report on large projects undertaken by various ministries/departments is not at all acceptable," the panel said in its report tabled in the Parliament.
It further said, "First put their own house in order before they can prevail upon other ministries to meet time and cost deadlines of projects." The Statistics Ministry regularly bring out time and cost overrun analysis of central projects being implemented by various ministries and departments.