India's Chief Economic Advisor (CEA), V Anantha Nageswaran, issued a robust defence of the country's official economic growth statistics on Tuesday, criticising what he termed as a selective and asymmetric scrutiny of data that surfaces primarily when the numbers outperform expectations.
A Call for Symmetric Evaluation of Economic Data
The CEA's remarks came during a workshop organised by the Ministry of Statistics and Programme Implementation (MoSPI). He pointedly noted that methodological questions about GDP calculation are rarely raised when growth figures disappoint. "When the Indian statistical authorities reported a 25 per cent contraction (for April-June 2020), nobody got up to question the methodology, the reliability of the numbers, the single deflator being used, etc," Nageswaran stated.
He argued that these aspects were accepted without complaint because the data aligned with pessimistic preconceptions. "It's only when the GDP growth numbers surprise on the upside, we hear all these concerns being raised," he added, calling for a more balanced and mature public discourse on economic performance.
Addressing Concerns Over Growth Calculation Methodology
Nageswaran's defence follows the release of data in late November showing India's GDP growth rate at 8.2 per cent for the July-September quarter, after a 7.8 per cent expansion in April-June. Some economists have suggested growth in these quarters might be overstated due to the use of the single-deflator method for calculating real gross value added (GVA).
This method, they argue, can inflate sectoral GVA when input prices are falling or rising slower than final output prices. A specific concern has been the deflation of the services sector GVA using wholesale price indices, which may be lower than actual services inflation. For instance, the Q2 GDP data implied services inflation of around 1.2%, whereas Consumer Price Index data suggested it was closer to 3.3%.
Nageswaran countered these claims by highlighting that similar methodological critiques were absent during 2021-22 and 2022-23 when high wholesale inflation likely suppressed the real growth reading for services. He presented an analysis showing that applying a hypothetical services deflator to past data resulted in a discrepancy of "not even 1 per cent," concluding that the GDP data is not materially overstating growth.
Transparency, Replicability, and a Defence of Indian Statistical Rigour
The CEA emphasised the need for consistency and transparency, urging MoSPI to make its manuals and documents easily accessible to bolster public trust. "Credibility comes from replicability. If outsiders are able to replicate our data, our estimates, then their trust in the data will also increase," he said.
He also pushed back against a perceived inferiority complex regarding Indian statistical methods, noting that while all methodologies have limitations, India does not employ some of the questionable practices used by certain developed nations. "We seem to be particularly fond of questioning our methods and less so of others, somehow thinking that our methods are inferior to others," Nageswaran observed, calling for a change in this mindset.
The Informal Sector: Likely Overestimated
Shifting to another key economic debate, the CEA opined that the size of India's informal economy is frequently overestimated. He attributed this to the structural nature of Indian businesses, which are predominantly sole proprietorships and small partnerships.
"Indian businesses... don't keep separate books of accounts for their personal and professional activities. That is a reason, I think, that no matter how much we do, we actually are ending up overestimating informality," Nageswaran explained, highlighting the definitional and measurement challenges involved.
In his concluding remarks, the top government economist appealed for rigorous, good-faith criticism of economic data, free from what he described as "under-informed or half-baked questions" deliberately designed to sow doubt.
