If the International Monetary Fund’s predictions are to be believed then for the first time in nearly 16 years, India will outgrow China with a projected Gross Domestic Product growth (GDP) rate of 7.5 per cent. This announcement is akin to e-commerce retailers announcing that customers would soon get their goods delivered by none other than Santa Claus. As per the latest numbers, the Indian economy is the fastest growing economy among large economies of the world. Beating all estimates, India’s GDP figures showed a whopping growth of 7.5 per cent in the 3rd quarter of the Financial Year (FY) 2014-15. What explains these numbers? Well for one, the Central Statistics Office (CSO) changed the methodology for calculating Gross Domestic Product as recently as last year.
A change in methodology is considered as a major factor in contributing to the rise of GDP. However, according to the CSO, the new method is more polished and is in accordance with globally accepted best practices. Earlier, India happened to measure GDP based on the factor costs method. Under the new method, GDP is being measured at market prices adjusted for taxes and subsidies. What makes the 7.5 per cent growth rate claim tough to believe is lack of support from other economic indicators. Other economic indicators such as Index of Industrial production, Bank credit data and more importantly Government tax collection do not back such a huge jump in the GDP.
Bursting the bubble of the government’s tall claims are the untimely rains and hailstorms which greeted our country’s farmers this past one month. Untimely rain and hailstorm have caused irreparable damage to Rabi-crops in wheat-producing states like Punjab, Haryana, Uttar Pradesh and Bihar. The crops damaged include-wheat, mustard, barley and gram. Wheat samples collected from the affected states show a massive 60 per cent damage to the grain’s content. Experts are predicting that this will create a shortage of wheat in India’s buffer stock and create a severe dearth of fodder in the days to come. Meanwhile the latest news trickling in from Vidharbha points out that unseasonal rain has damaged standing Rabi crops in nearly 50,000 hectares of land.
This begs the pertinent question: What use is statistical window dressing if it does not translate into improved quality of life for our citizens? Wouldn’t 7.5 per cent growth even if it’s achieved be another meaningless public relations illusion sold by this government, especially when an agrarian distress looms large in the background?