An exercise in futility?
The economy was facing serious problems when Prime Minister P V Narasimha Rao picked Manmohan Singh, a noted economist, for the post of Finance Minister in 1991. He initiated reforms and set the economy on an upward trajectory.
As Prime Minister, Manmohan Singh adopted a cautious approach, and the Indian economy weathered the recurrent setbacks countries across the world experienced during 2007-11. It was racing ahead when Modi led the Bharatiya Janata Party to power in 2014.
Heeding calls from abroad for more reforms, Modi went ahead with steps like introduction of goods and services tax on which Manmohan Singh was moving slowly. He also undertook some measures like demonetisation of high-value currencies, without adequate preparations, causing damage to some sectors of the economy.
Within a few months Modi has to face the electorate. His campaign strategy is to run down his predecessors, starting with the illustrious Jawaharlal Nehru, accusing them of wasting the seven decades since Independence without doing anything and making questionable claims about his own achievements of the last four years.
Such a campaign may go down well with his ardent followers but there are others who are inclined to look at facts and figures.
Figures which have been in the public domain for a long time show that the GDP growth rate, which was 9.3 per cent in fiscal 2006 and 9.8 per cent in 2007, slumped to 3.9 per cent in 2008 as the US financial crisis dragged the global economy down.
Recovering quickly, India registered a growth of 8.5 per cent in 2009 and 10. 3 per cent in 2010 but the rate dropped to 6.6 per cent in 2011 and 5.5 per cent in 2012. Thereafter it started climbing again and was 6.4 per cent in 2013 and 7.4 per cent in 2014.
Under Modi, the upward movement continued, with the growth rate rising to 8.2 per cent in 2015. Thereafter it fell to 7.1 per cent in 2016 and 6.7 per cent in 2017 due, not to external developments, but to internal factors.
The Central Statistical Organisation periodically revises the basis on which the GDP is calculated. In 2015 it changed the base year for GDP calculation from 2004-05 to 2011-12.
Under the revised scheme the share of industry in the economy went up from 19 per cent to 23 per cent, that of manufacturing from 14.7 per cent to 17.4 per cent, and agriculture from 17.8 per cent to 18.5 per cent. The service’s share shrank from 24.7 per cent to 17.4 per cent.
This resulted in a general increase in the growth rate figures, starting with the UPA government’s last two years. But the figures of the Modi years still lagged behind those of the Manmohan Singh period.
Recently the CSO revised the figures of the earlier UPA years, applying the new formula with retrospective effect. The exercise brought down the growth rates of the UPA period.
The growth rate of fiscal 2010 now fell from 10.3 per cent to 8.5 per cent and that of fiscal 2007 from 9.8 per cent to 7.7 per cent.
Several experts questioned the rationale behind the exercise. Economic journalist MK Venu pointed out that the new data went against the basic laws of macroeconomics. It showed a lower GDP growth rate during the UPA years when the gross investment to GDP ratio was 38 per cent and a higher growth rate during Modi’s four years when the gross investment to GDP ratio was only 30.3 per cent.
This time the National Institution for Transforming India, also known as NITI Aayog, the think tank which Modi set up after disbanding the Planning Commission which had been in existence since the time of Nehru, was involved in the release of the data.
National Statistical Commission Chairman Pronab Sen, who is a former CSO chief, criticising NITI Aayog’s involvement, said it amounted to politicising institutions which dealt with statistics. The newly released data “does not pass the basic smell test linked to ground realities,” he added.
What the CSO and NITI Aayog together did was to shift the goalpost long after the match was over and re-fix the results. The exercise has ruined the high reputation the CSO had enjoyed as a professional organisation working without a political motive. -- Gulf Today, Sharjah, December 11 2018.
BRP Bhaskar
India can be proud of its current status as the world’s fastest growing large economy. However, Prime Minister Narendra Modi is not quite happy because he has not been able to match the record of his immediate predecessor, Manmohan Singh, who headed the Congress-led United Progressive Alliance government for 10 years.
The economy was facing serious problems when Prime Minister P V Narasimha Rao picked Manmohan Singh, a noted economist, for the post of Finance Minister in 1991. He initiated reforms and set the economy on an upward trajectory.
As Prime Minister, Manmohan Singh adopted a cautious approach, and the Indian economy weathered the recurrent setbacks countries across the world experienced during 2007-11. It was racing ahead when Modi led the Bharatiya Janata Party to power in 2014.
Heeding calls from abroad for more reforms, Modi went ahead with steps like introduction of goods and services tax on which Manmohan Singh was moving slowly. He also undertook some measures like demonetisation of high-value currencies, without adequate preparations, causing damage to some sectors of the economy.
Within a few months Modi has to face the electorate. His campaign strategy is to run down his predecessors, starting with the illustrious Jawaharlal Nehru, accusing them of wasting the seven decades since Independence without doing anything and making questionable claims about his own achievements of the last four years.
Such a campaign may go down well with his ardent followers but there are others who are inclined to look at facts and figures.
Figures which have been in the public domain for a long time show that the GDP growth rate, which was 9.3 per cent in fiscal 2006 and 9.8 per cent in 2007, slumped to 3.9 per cent in 2008 as the US financial crisis dragged the global economy down.
Recovering quickly, India registered a growth of 8.5 per cent in 2009 and 10. 3 per cent in 2010 but the rate dropped to 6.6 per cent in 2011 and 5.5 per cent in 2012. Thereafter it started climbing again and was 6.4 per cent in 2013 and 7.4 per cent in 2014.
Under Modi, the upward movement continued, with the growth rate rising to 8.2 per cent in 2015. Thereafter it fell to 7.1 per cent in 2016 and 6.7 per cent in 2017 due, not to external developments, but to internal factors.
The Central Statistical Organisation periodically revises the basis on which the GDP is calculated. In 2015 it changed the base year for GDP calculation from 2004-05 to 2011-12.
Under the revised scheme the share of industry in the economy went up from 19 per cent to 23 per cent, that of manufacturing from 14.7 per cent to 17.4 per cent, and agriculture from 17.8 per cent to 18.5 per cent. The service’s share shrank from 24.7 per cent to 17.4 per cent.
This resulted in a general increase in the growth rate figures, starting with the UPA government’s last two years. But the figures of the Modi years still lagged behind those of the Manmohan Singh period.
Recently the CSO revised the figures of the earlier UPA years, applying the new formula with retrospective effect. The exercise brought down the growth rates of the UPA period.
The growth rate of fiscal 2010 now fell from 10.3 per cent to 8.5 per cent and that of fiscal 2007 from 9.8 per cent to 7.7 per cent.
Several experts questioned the rationale behind the exercise. Economic journalist MK Venu pointed out that the new data went against the basic laws of macroeconomics. It showed a lower GDP growth rate during the UPA years when the gross investment to GDP ratio was 38 per cent and a higher growth rate during Modi’s four years when the gross investment to GDP ratio was only 30.3 per cent.
This time the National Institution for Transforming India, also known as NITI Aayog, the think tank which Modi set up after disbanding the Planning Commission which had been in existence since the time of Nehru, was involved in the release of the data.
National Statistical Commission Chairman Pronab Sen, who is a former CSO chief, criticising NITI Aayog’s involvement, said it amounted to politicising institutions which dealt with statistics. The newly released data “does not pass the basic smell test linked to ground realities,” he added.
What the CSO and NITI Aayog together did was to shift the goalpost long after the match was over and re-fix the results. The exercise has ruined the high reputation the CSO had enjoyed as a professional organisation working without a political motive. -- Gulf Today, Sharjah, December 11 2018.
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