India's GDP growth: New evidence for fresh beginnings -Arvind Subramanian
-The Indian Express
Methodological changes have led to overestimating GDP growth by 2.5 percentage points per year between 2011-12 and 2016-17. Actual growth is around 4.5 per cent.
The promise of democracy is the periodic opportunity it creates for fresh beginnings. A government re-elected with such a resounding mandate should continue with the successful aspects of its economic policies. The most notable has been promoting economic inclusion via the public provision of essential private goods and services, including toilets, housing, power, cooking gas, bank accounts, emergency medical assistance, and now a basic income for all farmers.
But that mandate should also embolden change in other aspects, based on new evidence and fresh understanding. My new research (available at: https://www.hks.harvard.edu/centers/cid/publications/facul
ty-working-papers/india-gdp-overestimate) suggests that post-global financial crisis, the heady narrative of a guns-blazing India — that statisticians led us to believe — may have to cede to a more realistic one of an economy growing solidly but not spectacularly.
My results indicate that methodological changes led to GDP growth being overstated by about 2.5 percentage points per year between 2011-12 and 2016-17, a period that spans both UPA and NDA governments. Official estimates place average annual growth for this period at about 7 per cent. Actual growth may have been about 4.5 per cent, with a 95 per cent confidence interval of 3.5 to 5.5 per cent.
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