IMF Chief Economist Gita Gopinath is the latest to join the chorus of the prominent people raising doubts over India’s real economic growth, after a recent letter by 108 economist raised concern and sparked a debate on the credibility of official data.
“There are still some issues with the way India calculates its growth rate and the IMF is paying close attention to the new numbers that are coming out,’’ Gita Gopinath said to CNBC in a recent interview.
India, being touted among the fastest growing economies, is also an aspiring nation with one of the youngest populations in an aging world. However, the official growth numbers have come under severe criticism from time to time as the growth rate does not resonate with the situation on the ground, according to various experts.
Although Gita Gopinath welcomed the changes made to the method of estimating GDP growth rate such as revision in base years, she raised concerns over the use of “deflator” in the process. GDP deflator is a measure of inflation which captures the rise in GDP due to higher prices rather than an increase in output, she said.
Earlier, former RBI governor and former IMF Chief Economist Raghuram Rajan also flagged concerns on the method of GDP calculations. He went as far as to doubt if India is actually growing at 7% at all. “How can we be growing at 7 per cent and not have jobs. Well, one possibility is that we are not growing at 7 per cent,” he said. Raghuram Rajan further proposed setting up an independent and impartial body to look into the matter, in order to restore the confidence of citizens.
“Given the discrepancy between government claims on these, and those of quasi-government and private bodies, it is better to turn to other evidence,” wrote Raghuram Rajan in Times of India on Wednesday.
Citing the necessity of statistical integrity, the letter by 108 economists and social scientists has appealed to restore the credibility of official data in order to make sound decisions and policies.
Although a counter letter by 131 accountants rubbished these claims, Oxfam India backed the economists argument. There has to be some point in it, as these economists are the who’s who of the country and the world, and thus their claims cannot be dismissed, Diya Dutta, Research Manager, Oxfam India, said in response to query by Financial Express Online.
via Issues with India’s growth figures: Gita Gopinath says IMF paying close attention – The Financial Express