A day after Former Chief Economic Adviser Arvind Subramanian said that Indian economy may have grown at an annual rate of just 4.5 per cent during 2011-12 to 2016-17 instead of the reported 7 per cent, noted economist Arun Kumar says that even as he may be correct about overestimation of rate of growth in last few years, the methodology used to calculate the size of the overestimation may not be correct as it is an indirect method of determining GDP growth. He points out that the unorganised sector and its slowdown have not been taken into account by Subramanian’s paper or even into government’s own calculations and India’s GDP growth rate could be around only 1 per cent if that is accounted for. Kumar highlights that economic shocks like demonetisation and GST affected the unorganised sector majorly and that the correct method to calculate growth rate was to take the unorganised sector into account. Kumar also questions the validity of inter-country comparison used in the paper. Subramanian estimated a relationship between a set of indicators and GDP growth and compared it with 71 high and middle-income countries.
Science,Sustainable Development,Down to Earth,CSE,Centre for Science and Environment,GDP,Economy,Arun kumar,Arivind Subramanian,demonestization,GST,NDA government,Indian economy,Annual GDP,unorganised sector,Reseve Bank of India,Indian Government,
A day after Former Chief Economic Adviser Arvind Subramanian said that Indian economy may have grown at an annual rate of just 4.5 per cent during 2011-12 to 2016-17 instead of the reported 7 per cent, noted economist Arun Kumar says that even as he may be correct about overestimation of rate of growth in last few years, the methodology used to calculate the size of the overestimation may not be correct as it is an indirect method of determining GDP growth. He points out that the unorganised sector and its slowdown have not been taken into account by Subramanian’s paper or even into government’s own calculations and India’s GDP growth rate could be around only 1 per cent if that is accounted for. Kumar highlights that economic shocks like demonetisation and GST affected the unorganised sector majorly and that the correct method to calculate growth rate was to take the unorganised sector into account. Kumar also questions the validity of inter-country comparison used in the paper. Subramanian estimated a relationship between a set of indicators and GDP growth and compared it with 71 high and middle-income countries.
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