IMF flags issues with India's GDP calculation method; says it's complex
The International Monetary Fund in its latest report has pointed out discrepancies in calculating deflation, which is used to convert GDP at current prices to constant prices
- Dec 26, 2019,
- Updated Jan 9, 2020 2:50 PM IST
The International Monetary Fund (IMF), in its annual staff report on India released Monday, raised doubts over India's methodology to calculate gross domestic product (GDP) numbers, saying certain changes to historical series and discrepancies between GDP by activity and GDP by expenditure have made the growth calculation process complex.
Notably, the Modi government had faced flak over the back series data on the base year of 2011-12 after a National Statistical Commission's (NSC) report in 2018 showed double-digit growth during some years of the UPA government. The Centre had then junked the report, only to later come up with its own GDP back series data, which lowered the growth rate under the UPA government. The issue had raised a lot of political dust with the Congress and the Opposition leadership seeing it as an effort to discredit the previous government's 'good' work.
The IMF in its latest report has pointed out discrepancies in calculating deflation, which is used to convert GDP at current prices to constant prices. The body said the compilation of constant price GDP using WPI (Wholesale Price Index) as a deflator instead of PPI (Producer Price Index) for many activities makes the process complex, as it can't capture certain services uniformly.
The IMF also asserted that India is now in the midst of a significant economic slowdown, and urged the government to take urgent policy actions to address the current prolonged downturn. The report said though India's rapid economic expansion in recent years lifted millions of people out of poverty, a combination of factors led to subdued economic growth in India in the first half of 2019.
The International Monetary Fund (IMF), in its annual staff report on India released Monday, raised doubts over India's methodology to calculate gross domestic product (GDP) numbers, saying certain changes to historical series and discrepancies between GDP by activity and GDP by expenditure have made the growth calculation process complex.
Notably, the Modi government had faced flak over the back series data on the base year of 2011-12 after a National Statistical Commission's (NSC) report in 2018 showed double-digit growth during some years of the UPA government. The Centre had then junked the report, only to later come up with its own GDP back series data, which lowered the growth rate under the UPA government. The issue had raised a lot of political dust with the Congress and the Opposition leadership seeing it as an effort to discredit the previous government's 'good' work.
The IMF in its latest report has pointed out discrepancies in calculating deflation, which is used to convert GDP at current prices to constant prices. The body said the compilation of constant price GDP using WPI (Wholesale Price Index) as a deflator instead of PPI (Producer Price Index) for many activities makes the process complex, as it can't capture certain services uniformly.
The IMF also asserted that India is now in the midst of a significant economic slowdown, and urged the government to take urgent policy actions to address the current prolonged downturn. The report said though India's rapid economic expansion in recent years lifted millions of people out of poverty, a combination of factors led to subdued economic growth in India in the first half of 2019.