Don't compare new GDP data series with old: Chief statistician TCA Anant

New Delhi: Chief statistician TCA Anant, seeking to end a controversy over new economic growth numbers, said it would be possible to make meaningful conclusions only when data for previous years is made available.
“Once the back-series is worked out and understood, only then-...higher growth rates relative to the past become meaningful,” Anant said at a conference called by the Central Statistics Office on Monday to dispel doubts about the new numbers.

India’s economic growth was revised to 5.1% in 2012-13 and 6.9% in 2013-14 in the new GDP series. The old data had pegged growth at 4.5% and 4.7%, respectively. Advance estimates for 2014-15 indicate growth at 7.4%.

The new series updates the base year to 2011-12 from 2004-05 and shifts to the internationally accepted market price system as opposed to the factor cost method followed earlier. Experts have doubted the data, arguing that growth under the new series is not consistent with high-frequency indicators such as industrial production, which increased 2.6% in the first 11 months of 2014-15. COMPARISON NOT RIGHT NOW Anant says such comparisons are unwarranted in the absence of past data.

“Otherwise, it is like comparing apple to oranges. It is entirely possible that 5% growth rate in the old series is qualitatively in the same ballpark as 6.5% or 7% in the new series. It is possible. I don’t know,” he said at the Data Users’ Conference attended by several economists and experts. “…the new series of national accounts reflects or represents a series which is structurally very different from the past.

At this moment, we do not have enough information to be able to give you clearer understanding of longrun growth dynamics which emerges in the new series vis-avis the past. That exercise…we are still working,” said Anant. The exercise to produce an indicative back-series will be partly assumption-driven, given the non-availability of the database used to compute the new national accounts series.

The CSO started using MCA21 database of 5.2 lakh companies to compute manufacturing growth, in addition to date from the annual survey of industries. This led to a sharp revision in manufacturing growth to 5.3% in FY14 compared with a contraction of 0.7% estimated in the earlier series. The share of manufacturing in the economy went up to 17.3% in 2013-14 against 12.9% in the older series.

“From 2011-12, we were able to capture 85% of the companies which file returns on this database,” Anant said. Another shift was in corporate manufacturing data. The figures were taken into account using enterprise-based coverage against an establishment-based approach in the earlier series. “Earlier establishment-based data was better captured in ASI than enterprise- based, which was relatively a small sample. Now, with corporate database, our coverage for enterprise is almost universal,” Anant said. In the establishment approach, calculation of production was done plant by plant.

Moreover, data on value added is now available for part of the government sector and the corporate sector. Until the new series, neither of these two segments was captured entirely “The big change that we made was that local bodies, which we were capturing on a sample basis, are now being captured on complete account basis for almost 60-70%. The work is in progress to extend it to close to 100%. This was a big change, for our government accounting improved enormously,” he said.

MORGAN STANLEY RAISES DOUBT Morgan Stanley has said it is better to look at ‘broad-based indicators of growth’ to assess the momentum of expansion instead of relying only on the new GDP numbers. It questioned the quickening of growth under the new series. “This acceleration in growth is not corroborated by the underlying broad-based growth indicators,” the US bank said in a report, which estimates India growing at 7.9% in FY16 under the new GDP series and 8.4% in FY17