Revision of GDP Estimates
The Ministry of Statistics and Programme Implementation has released the First Revised Estimates of National Income, Consumption Expenditure, Saving and Capital Formation, 2017-18. The highlights of the revised estimates are:
- The forecast for GDP growth for 2017-18 was increased to 7.2% from the earlier estimate of 6.7%.
- The actual growth rate in 2016-17 has been increased to 8.2% from the 7.1% estimated earlier.
The Ministry of Statistics and Programme Implementation clarifies that the revision of the estimates for 2015-16 and 2016-17 are on the account of the availability of the latest data on agricultural production, industrial production, government expenditure (replacing the Revised Estimates with Actual for 2016-17) and also more comprehensive data available from various source agencies like the MCA and the NABARD and State/Union Territory Directorates of Economics and Statistics.
Criticisms against the Revision
The Economists criticise the revision because of the following reasons:
- The numbers do not match up to the ground realities.
- The data corresponding to the demonetisation year of 2016-17 shows strong growth in sectors that were widely agreed to have been badly hit by the exercise.
- The main factor for the revision was the increase in private final consumption expenditure which was increased by 1 percentage point. This was inconsistent with the idea of people having less cash to make purchases.
- The other main driver of the upward revision was the construction sector which was revised upwards by 4.7 percentage points. The earlier analyses had indicated that construction which has a large informal sector component was adversely affected similar to other informal sectors due to demonetisation.
- Other drivers for the upward revision in 2017-18, mining and quarrying sector and the public administration sector had data that is compiled by the government itself. Hence they should not have undergone such a vast revision. .
With 2019 being a election year, critics also cry foul play on part of the government to project a happy picture before the general elections.
Categories: Business, Economy & Banking