An economic disaster foretold -Amit Bhaduri and Deepankar Basu
The reported contraction of the economy is likely an underestimate for reasons of omission and commission
According to data released by the Ministry of Statistics and Programme Implementation of the Government of India on August 31, 2020, real quarterly GDP contracted by a whopping 23.9% between April-June 2019 and April-June 2020. This magnitude of real GDP decline is unprecedented since the country started publishing quarterly GDP estimates in 1996. This is an economic disaster, no doubt. But is a bigger one in the offing?
According to the Organisation for Economic Cooperation and Development, India’s real GDP contraction between April-June 2019 and April-June 2020 has been the largest among 13 large economies of the world. China is the only country which saw a positive growth of 3.2% in that period. However, even that reported contraction of the Indian economy in all likelihood is an underestimate for reasons of omission of statistical information and commission of policies of insidious intent.
An underestimated disaster
The unorganised sector forms a significant part of the Indian economy. According to some estimates, it accounts for 45% of output and 93% of employment of the working population.
While data collection methods have undoubtedly improved over time, coming up with reliable estimates of value added in the unorganised sector is challenging. Typically, government statisticians combine information about value added per worker from enterprise surveys with information about employment from employment-unemployment surveys to generate estimates of output in the unorganised sector.
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The Hindu, 16 September, 2020, https://www.thehindu.com/opinion/op-ed/an-economic-disaster-foretold/article32614425.ece?fbclid=IwAR3sf_Wa1K3jy3ZLMLHsqoNLUy6GYQiRKjyQm-SCiRPa6YJro4LGg5g0LEk