Mumbai: The GDP estimates are based on "accepted procedures, methodologies and available data", the Union government said on Tuesday after an article by former Chief Economic Adviser Arvind Subramanian suggested that the figures are grossly overestimated.
In an article published by the Indian Express newspaper on Tuesday, Subramanian -- who was Chief Economic Adviser for Prime Minister Narendra Modi's government between 2014 and 2018 -- said the actual growth figures were closer to 4.5 per cent, rather than the 7 per cent stated by the government.
Subramanian has deduced that India's economic growth rate has been overestimated by around 2.5 percentage points between 2011-12 and 2016-17 due to a change in methodology for calculating GDP. He has said so in a research paper published at Harvard University.
The paper comes amidst controversy over the country's economic growth under the new GDP series. The revision in the methodology happened during the first term of the Modi government. Manufacturing is one such sector where the calculations have been largely misread, wrote Subramanian, who quit as the chief economic adviser in August last year before his extended tenure was to end in May 2019.
He said the implication of this is: "Macro-economic policy is too tight. Impetus for reform is possibly dented. Going forward, restoring growth must be the highest priority, including financing the government's laudable inclusion agenda. GDP estimation must be revisited."
Last month, official data showed that economic growth slowed down to a five-year low of 5.8 per cent in January-March, pushing India behind China, due to poor showing by agriculture and manufacturing sectors.
The Ministry of Statistics and Programme Implementation, however, insists that Subramanian's overestimation of India's GDP growth is primarily based on an analysis of indicators like electricity consumption, two-wheeler sales and commercial vehicle sales using an econometric model and associated assumptions.
