India’s chief economic adviser (CEA) V. Anantha Nageswaran on Tuesday said that while all estimation methodologies have inherent limitations, there is a need to change the mindset that India’s system of estimating gross domestic product (GDP) is
inferior.

Nageswaran’s remarks come amid persistent concerns over the credibility of India’s economic growth numbers. The debate was recently rekindled after the International Monetary Fund (IMF) assigned India’s national accounts system a “C” grade, flagging issues such as the use of an outdated base year of 2011-12, reliance on the wholesale price index (WPI) for deflators, and inadequate coverage of the informal sector.

The IMF’s assessment prompted swift clarifications from multiple quarters, including the finance ministry and the Reserve Bank of India (RBI), defending the robustness of India’s statistical framework.

Concerns over GDP estimation are not new. In 2019, former CEA Arvind Subramanian argued in a research paper that India’s GDP growth may have been overstated due to methodological changes introduced after the 2011-12 base year revision.

However, the current CEA pointed out that questions around methodology tend to surface only when GDP numbers exceed expectations. He noted that similar scrutiny is largely absent when growth data turns out weaker than anticipated.

“It is not as if the Indian GDP numbers are overstating the GDP case, but unfortunately, all these... under-informed or half-baked questions are left deliberately hanging to sow the seeds of doubt in people, and it does not necessarily serve any purpose because they are not rigorous,” the CEA said.

He was addressing various stakeholders at the pre-release consultative workshop on the base revision of CPI, GDP, and IIP, organised by the ministry of statistics and programme implementation (MoSPI) in the national capital.

“In general, we are engaged in an exercise of estimation, and all estimation methodologies will have limitations, but we seem to be particularly fond of questioning our methods, and less so of others, somehow thinking that our methods are inferior to others. It also reflects our mindset, and that is something that we need to change,” Nageswaran said.

Seeking to answer those critical of the government’s data estimations, the CEA emphasised the need for everyone to be a lot more mature in the way they evaluate, publicise or write a critique about the data.

Earlier this week, MoSPI said that it will release a new series of macroeconomic data with a changed base year for retail inflation as well as national accounts in February and for industrial production in May next year.