‘Absence of generalised inflation must be analysed more carefully’

There is need for a more detailed analysis to find the reasons behind the absence of generalised inflation in the economy, the country’s chief statistician TCA Anant said.

“The fact that we are having an absence of a generalised inflation should be analysed much more carefully,” he told BusinessLine.

The Wholesale Price Index inflation has been in the negative zone for 14 straight months, raising concerns of deflation. It was -0.73 per cent in December 2015.

In the Mid-Year Economic Analysis 2015-16, Chief Economic Advisor Arvind Subramanian had called for a review of the government’s fiscal consolidation plan for 2016-17, citing “the sharp and continuing decline in nominal GDP growth”. The report also blamed low inflation as one of the reasons that was driving nominal GDP growth below the 11.15 per cent estimated in Budget 2015-16.

“We are in an unusual position, where the nominal growth rate is very close to the constant price growth rate. And that is a concern,” said Anant, adding that the nominal GDP growth rate will begin to pick up as the deflationary trend in the wholesale price index winds down.

“A lot of commodity prices, in my judgment, will hit the bottom… If that be the case, then the pace of fall (in the WPI) stops or moderates, and we may expect to see the negative WPI inflation to moderate and get back to slightly higher levels in 2016-17 or 2017-18,” he said.

Anant said the Central Statistical Office (CSO) was working on a back series for the new GDP series that will provide a comparison of growth estimates between the old and new series.

To make up for lack of the MCA-21 database (corporate information provided by the Ministry of Corporate Affairs), which is available only till 2007, the CSO will use corporate data from various sources for the back series. “We have tried to use as much corporate data as possible. We will work on it further after the third-quarter GDP estimates are released on February 8,” he said.

On Reserve Bank of India Governor Raghuram Rajan’s comment that “there are problems” with the way GDP is counted, Anant said: “This is nothing to do with the new series or the old series, it was a general point on GDP itself. The RBI Governor was making an academic point,” adding that the methodological debate about GDP is well known.

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