'New back series GDP data methodologically quite different'

The new Gross Domestic Product (GDP) back series data, which lowers the GDP growth rate under the United Progressive Alliance (UPA)  government, has already 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 ahead of parliamentary elections next year.

The new number lowers the peak GDP growth rate under the UPA from 10.3 per cent in 2010-11 to 8.5 per cent. The average growth under the UPA government, after the back-series revision for 2005-06 to 2011-12 declines to 6.82 per cent from 7.75 per cent earlier.

Curiously, a committee set up by the National Statistical Commission came out with another set of back series data, which was 'accidentally' released in July this year. It showed much higher GDP growth numbers under the UPA government. For example, as per the committee's data, the GDP grew at 10.8 per cent in 2010-11 against the previously known 10.3 per cent. The data released by the committee had shown 30-50 basis points increase in GDP growth figures compared to previously known figures.

Also read: Why the new GDP numbers are confounding

However, the new set of numbers released by the Central Statistics Office (CSO) has completely reversed the trend. What is the reason for this? Business Today spoke to Sudipto Mundle, who headed the committee on Real Sector Statistics. The committee, among other things, had come out with the back series data, which, it seems, the government has disowned for some reasons.

Mundle says the new back series data was being worked on by another sub-committee working under committee on real sector statistics. However, they did not submit their report to them, following which the committee submitted its final report.

He says the committee that worked on the data released yesterday has used a different approach. "Methodologically, they are quite different. We had done an econometric exercise based on data that was available by linking base year of the old series with that of the new series. And in way, that was smooth and the difference was distributed smoothly. It was an econometric approach. Their approach is quite different," he says.

According to him, they have used some data which only they had access to.

Also read: The math behind GDP back series which took away India's best growth year

"Taking the (new) data as it is on face value, the services sector output is lower than their own old series and the share of the secondary sector was higher than the tertiary sector. What that implies is that in the subsequent year, the growth rate of the secondary sector - manufacturing sector --has come down which is a cause of concern. The difference in investment rate now is sharper between its peak and the present. So, that is another issue," he explains. However, Mundle says that the new data needs further study to understand exactly why the two old series data differ so much.