Hyderabad: Giving a severe blow the government’s narrative on India’s economic growth, International Monetary Fund’s chief economist Gita Gopinath has expressed doubt over India’s growth rate. She said there are still some issues with the way India calculates its economic growth rate.
“There are still some issues with the way India calculates its growth rate and the IMF is paying close attention to the new numbers that are coming out,” Dr Gopinath said in an interview with CNBC.
The IMF has recently slashed India’s growth estimate for the fiscal year 2019-20 and FY 2020-21 by 20 basis points,
“With regards to the newer numbers that are coming out, we are paying close attention to it. We are speaking closely to our colleagues in India and then we will make a determination based on that,” said Dr Gopinath.
Though she welcomed the changes that the Indian government made to the GDP calculation in 2015, including the change in base year, she flagged concerns over the “deflator” used to calculate the real GDP.
A GDP deflator is a measure of inflation used to capture the extent of increase in the GDP due to higher prices rather than an increase in output. Typically a lower deflator would wrongly suggest an increase in output, instead of an increase in the value of goods and services on the account of higher prices.
According to CNBC, Dr Gopinath has also underlined the need for India to communicate more transparently about its statistics given its significance in the global landscape.
“India is projected to be growing over seven per cent both in 2019 and 2020 which makes it one of the fastest growing large economies of the world, which is why it is even more important that the statistics coming out of India are transparently communicated because everybody is watching India at this point” the IMF chief economist told the news channel.
The comments from Dr Gopinath and other top economists came after the government revised GDP data in February for the FY 2016-17 and FY 2017-18. For the FY 2016-17, GDP growth was revised sharply upwards from 7.1 per cent to 8.2 per cent despite a shock demonetisation of high value currency notes.
Recently, former RBI governor Raghuram Rajan too expressed doubts over India’s GDP data. “I am in the camp that has no idea what the statistics are at this point,” Rajan had said. He also went on to call for a comprehensive review.
“I would say setting up an impartial body to look at it is an important step to restoring confidence and it may well be that that body pronounces such to rebuild confidence, but we absolutely need better confidence in our GDP numbers now given the back and forth that we had,” said Raghuram Rajan.
“I know one minister (in the Modi government) has said (that) how can we be growing at 7 per cent and not have jobs. Well, one possibility is that we are not growing at 7 per cent,” Dr Rajan said.
