Will The “True” Rate Of Growth Please Stand Up?

The Indian Economy now resonates with the Glass Half Full, Half Empty analogy. To the many cheerleaders and the “spin” meisters of the ruling dispensation, India is the “fastest growing” major economy, clocking “blistering” rates of above 7%, no mean feat at a time when global growth is slowing. To the numerous critics of the government, “doubts” about the “real” rate of growth abound, leading to a “clash of narratives” as well as egos.

So, what should a layperson make of these “conflicting” takes on the Indian Economy? For starters, inflation is well above 6% by any yardstick. This means that the nominal GDP growth ought to be around 13% for the “real” growth rate to be anywhere close to 7%. However, by the government’s own statistics, the nominal rate of growth, appears to be a tad over 11%. Which is a clear indication that the data “hide” more than they reveal.

Compounding matters is the long standing “debate” over the data put out by this government since 2014, when they assumed power. Not only has the “base series” been changed to 2011, the methodology for calculating GDP too has been “revised”. Moreover, it has become commonplace to bring out multiple “revisions” to the quarterly and the annual GDP “estimates” (a “convenient” term, at the least), lending further credence to the arguments of the critics.

What is “settled” though, is the Pandemic years saw a massive contraction in the economy, with some putting a 25% drop in output. However, what is “arguable” here is the post pandemic recovery, which is “beefed up” by the “low” base of the aforementioned years. So, this is another “gripe” which hasn’t been answered satisfactorily. Added to this is the use of the “deflator”, a measure of the varying inflation “baskets” to arrive at GDP growth.

More so, the indices used to calculate inflation too are being questioned even by those economists, identified as “favorable” to the government. So, here we are, with all these numbers and high falutin economic jargon being tossed around in Op-Eds and the like, leaving us poor souls to scratch our heads as to how much exactly is the Indian Economy growing by?

I don’t have a degree in economics to put my case more forcefully. However, my intention here is a plea for more “clarity” on the “numbers”. As the 90s retro hit goes, Will The Real Shady Please Stand Up, and likewise, will we “know” for sure, what the “real” growth of the Indian Economy is? At a time when we’re being talked as the Next Big Thing, the least that investors too need to know is “accurate” reporting of the figures and numbers pertaining to the Indian Economy.

Last, we’re in “august” company here as China too went through (and continues to as evidenced by the “suspension” of youth employment data) wherein its growth rates were under a “cloud”, even at the height of its economic “miracle”. Perhaps, this is “how it works” and so, we should not “read” too much here.


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