But the economy size gets a bump-up under new base year
New Delhi: It’s official now. The government-initiated recalibration of the economy for the years 2004-05 to 2011-12, based on the new base year 2011-12, paints a somewhat less cheerful picture on the GDP growth front for these years.
However, the new methodology of changed base year (2011-12) with the latest data sources and improved coverage has bumped up the economy’s size in these eight years, resulting in a statistical effect of lowering GDP growth rates, say economy watchers.
One of the key takeaways from the back series estimates for 2004-05 to 2011-12 — released by the Central Statistics Office (CSO) here on Wednesday — is that GDP growth rates for these years under the earlier 2004-05 base year was “uniformly lower” than those in the new base year of 2011-12.
Part of the reason is that a change in base year to 2011-12 means increase in output levels (at constant prices) due to increased prices under the new base year.
Simply put, a plain comparison — although neither desirable nor ideal — of the two series (2011-12 vis-à-vis 2004-05) showed that GDP growth rates under the old series (2004-05) may have been overstated.
This lower GDP growth rate trend was evident in each of the years from 2004-05 to 2011-12. Interestingly, the maximum GDP growth rate recorded in these years under the back series estimate for 2004-05 to 2011-12 was 8.5 per cent in 2010-11, much lower than the 10.3 per cent growth rate recorded under the previous base year 2004-05.
The CSO’s 2011-12 back series computation on latest data sets, after factoring in the UN System of National Accounts (SNA-2008), demolishes the notion in several quarters that the Indian economy was entirely insulated from the global financial crisis in 2008-09, said economy watchers.
As against the earlier estimated GDP growth of 3.9 per cent in 2008-09, the Indian economy had only grown 3.1 per cent in that year, the latest back series data released on Wednesday revealed.
Also, the widespread belief that India’s economic growth had a “golden” run between 2005-06 and 2007-08 is somewhat diluted going by the latest recalibrated growth rates for these years.
As against the earlier estimated growth rates of 9.3 per cent (2005-06), 9.3 per cent (2006-07) and 9.8 per cent( 2007-08), the GDP print for these years under the back series came in at 7.9 per cent, 8.1 per cent and 7.7 per cent respectively.
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