New Back Series Data Show Economy Never Hit High-Growth
India’s GDP never really grew in double-digits in 2010-11nor crossed over into a high-growth phase of above 9% in the last decade or more – as earlier thought to be, as per new Back series data from 2005-06 to 2011-12, the new base year data computed by the Central Statistics Office (CSO) and released by the Niti Aayog on Wednesday 26 November 2018. The method of computation reflects the latest United Nations System of National Accounts. It also captures changes in the economy since 2004-05.
Robust, updated data are, in fact essentially an economic exercise that governments carry out in Back-casting, or reworking past national accounts statistics based on the latest base year, which involves inclusion of newer data sources, exclusion of out-dated ones and making some subjective assumptions in the process, mainly to enable precise comparison and analysis.
In 2015 government changed the methodology and the base-year for the computation of its economic performance, moving towards a Gross Value Added (GVA) method from the earlier GDP calculations and bringing forward the base-year to 2011-12 from 2004-05.
Data sources have also been updated. Experts had testified to the robustness of the method when it was introduced in 2015, even while underlining that the availability of reliable data was crucial to arrive at the correct overall picture.
The back-series release on 26 November 2018 provides the growth estimates for previous years using the new methodology.
India never really decoupled from the global economy during the years of the financial crisis of 2008-10 is one of the most valuable insights that are revealed from this data and that India’s recovery from the global financial crisis took longer than previously thought.
New back series data show a much lower GDP growth rate:
- Growth in 2008-09 plunged to 3.1% compared to the old series estimate of 3.9%.
- Growth in 2009-10 was at 7.9% compared to the old series estimate 8.5%.
- Growth in 2010-11 showed at 8.5% compared to the old series estimate of 10.3%.
- Average growth rate between 2008-09 and 2012-13 has been revised at 6% during the UPA-II regime, while
- Average growth rate in subsequent five years under the NDA stands at 7.12%.
India needs to invest more in data collection and integration and do informal sector surveys more frequently.
Union Minister of Finance and Corporate Affairs, Arun Jaitley, said that the new series was more broad-based and was a better reflection of the Indian economy, and was globally more comparable. Most experts, he said, including those who have headed the CSO, had opined that this better represented the real state of the Indian economy.