GDP Calculation Is Faulty Admits The Chief Statistician Of India

The Logical Indian

June 14th, 2016

Source: deccanchronicle | Image Courtesy: taxingtax

The Chief Statistician of India T.C.A. Anant has admitted that there are “some discrepancies” in the recently released GDP data on Friday and has said that the government is making efforts to minimise them.

Going by figures, the government of India suggests that GDP has grown at 7.9% in the last quarter and it is also the fastest growing economy in the world.

The true story is that discrepancies have soared to Rs 2.14 lakh crore. The Logical Indian recently published an article that says discrepancies cover 51% of the GDP. If discrepancies are removed from the GDP, then the actual GDP would come down to a mere 3.9%. In the previous fiscal, discrepancies amounted to (-) Rs 35,284 crore.


So what are ‘discrepancies’?

GDP is calculated by two methods – a. Income method b. Expenditure method, ideally calculation by both methods should be the same, however, there are always some statistical differences amounting to 0.1 – 1 % and these numbers could be more in the case of developing country. Discrepancies even by a few percentage points is a red flag, to have discrepancies as 51% of GDP is beyond imagination and explanation.

Mr. Anant said that discrepancy occurs because the government compile expenditure estimates along with production figure, which is based on some rule of thumbs, the allocation does not completely explain expenditure side accurately and thus the difference between the two estimates becomes discrepancy, as reported by Deccan Chronicle.

Even if we take this into consideration, few recently published facts completely go against such high rate of GDP.

  1. The factory output measured in terms of Industrial Production (IIP) has shrunk by 0.8 per cent in April this year, the first decline in three months.
  2. Capital goods output, which is a barometer of investment, declined sharply by 24.9 per cent in April.
  3. The Business Expectations Index (BEI), which is a useful metric for the confidence of companies, has fallen to its lowest level in the last two years.
  4. The agricultural sector which also is a key factor for country’s GDP saw a growth of merely 1.2%.

At a time like this, how can the GDP of the country accelerate?

Share your thoughts..

Related Stories

GDP

Good News: India’s GDP Growth Rate At 6.3% In Quarter 2, Shows Sharp Economic Rebound

Assets And Income Of 98 MLAs & 7 MPs Under Scrutiny Of CBDT For Unexpected Rise

India Loses Tag Of Fastest-Growing Major Economy: Growth Slows To Lowest Point In Over Two Years

GDP Growth

Indian Govt. Announces 7% GDP Growth, Confuses Bankers & Economists In India & Around The World

India's Industrial Growth Lowest In 10 Years

India’s Industrial Growth So Far This Fiscal Is Lowest In 10 Years, Now Stands At -0.27 Percent

unemployment rate highest in india

Unemployment Rose To A Five-Year High Of 5% In 2015-16, Finds Out Survey By Labour Bureau

Latest on The Logical Indian

My Social Responsibility

He Is Spending 40% Of His Salary To Run A School For The Children Who Cannot Afford Quality Education

News

Honor-Killing: Death Sentence To 6 Including Father-In-Law For Murdering A Dalit Engineering Graduate

My Social Responsibility

This Tribal Village Is On A Mission To Become The First English Literate Village Of India With The Help Of Their Local Language

News

Why Is The Transgender Community Upset About The Transgender Bill?

News

Delhi, Gujarat Tops The List For Counterfeit Currency; Read To Know More

Awareness

Restaurants To Face Jail, Fine For Selling Mineral Water Above MRP: Centre To Supreme Court