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Arvind Subramanian's calculation of GDP is flawed too, says economist Arun Kumar

-Down to Earth

He says neither the government not the former chief economic advisor include the unorganised sector while computing economic growth

Noted economist Arun Kumar said former chief economic advisor Arvind Subramanian is correct in saying that the rate of growth of Gross Domestic Product (GDP) has been overestimated in the last few years. Subramanian's methodology to gauge economic growth, however, may also not be correct — both being indirect methods to deteremine GDP, Kumar said on June 12, 2019.

Subramanian, on June 11, wrote that the Indian economy might have grown at 4.5 per cent annually during 2011-12 to 2016-17 instead of the reported 7 per cent.

Kumar pointed out that the unorganised sector and its slowdown has not been taken into account by Subramanian’s paper or even into the government’s own calculations. India’s GDP growth rate could be only around 1 per cent if that is accounted for, he added.

“When we estimate the GDP we look at various sectors in the economy and we count the different sectors and sub-sectors on how much they contribute to the GDP. We then add it up, which requires a lot of data and methodology,” said the former Jawaharlal Nehru University professor. “But what Subramanian has done is use a simplified method than collecting data sector-wise. So the question is how correct is this 4.5 per cent figure.”

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