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There’s Nothing to Celebrate About Q2 GDP Estimates -Prabhat Patmaik

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The statistics are dubious because there is a substantial increase in GDP under the head “discrepancies”, which is synonymous with errors and omissions.

It is ironic that government spokespersons should exhibit so much euphoria over the second quarter (July-September) gross domestic product (GDP) estimate, which shows a drop “only” of 7.5% compared with the second quarter 2019-20. The expectation had been that the drop would be larger, about 8 to 9%; and as the first quarter drop had been 23.9%, the talk has been of a “stronger recovery” than anticipated. The irony, however, is that on closer look the recovery appears both dubious, as well as immiserising and hence fragile.

It is dubious because there is a substantial increase in GDP under the head “discrepancies”, which is synonymous with errors and omissions. If we assume that the same absolute figure for errors and omissions holds for Q2 2020-21, as was the case for Q2 2019-20, then the decline between the two quarters is 8.7%, as was anticipated earlier, instead of the 7.5% that the National Statistics Office (NSO) estimates show. Thus the entire claim of a “stronger recovery” is statistically dubious.

But let us assume for the present that the GDP figure is correct and examine it further. Obviously, since there had been a sharp reduction in output because of the lockdown, some recovery from it was inevitable; the important question is what factors have contributed to that recovery.

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