Centre responds to former CEA Arvind Subramanian's claims of overestimation in GDP, says 'will come out with a point-to-point rebuttal'

Responding to former Chief Ecomic viser Dr. Arvind Subramanian's recently published paper which says that India’s GDP growth has been overestimated by 2.5%, Ecomic visory Council (EAC) on Wednesday has said that it would examine estimates me in paper and come out with a point-to-point rebuttal in due course.

Claiming that Subramanian is still unsure of India's growth, EAC also said that while se issues may have been raised by Subramanian during his tenure in government, he has taken his time to understand numbers. 

Earlier on Tuesday, former Chief Ecomic viser h deduced that India’s ecomic growth rate has been overestimated by around 2.5 percent points between 2011-12 and 2016-17 due to a change in methodology for calculating GDP. He h furr said that while official estimates pegged aver annual growth during this period at about 7%, actual growth may have been 4.5%.

His paper titled "India's GDP Mis-estimation: Likelihood, Magnitudes, Mechanisms, and Implications" was published on Tuesday which mainly spoke about new GDP series, its controversies and policy implications of having false data.

Recalculating growth rates, Subramanian states in his paper that "Manufacturing is one such sector where calculations have been largely mismeasured," due to which he claims that while “Official estimates place annual aver GDP growth between 2011-12 and 2016-17 at about 7 percent. We estimate that actual growth may have been about 4.5 percent with a 95 percent confidence interval of 3.5 - 5.5 percent.”

Talking about policy implications of miscalculation he said that growth must be restored at highest priority ding that GSP estimation must be revisited.

“Macro-ecomic policy too tight. impetus for reform possibly dented. Going forward, restoring growth must be highest priority, including to finance government’s laudable inclusion nda. GDP and entire national income accounts estimation must be revisited,” he writes in his paper.

Apart from policy implications, Subramanian, who worked in Narendra Modi-led government in 2014-2018, also states in his paper,   differences in new GDP estimation method and old one.