Countering former Chief Economic Advisor Dr. Arvind Subramanian's paper claiming the India's GDP is overestimated by 2.5%, with a 'point-to-point' rebuttal, the Economic Advisory Council, on Wednesday, has published its own paper titled ' GDP estimation in India- Perspectives and Facts ' in which it states that Subramanian's paper lacks rigor in terms of specific data sources and description.
In the paper it states that the choice of countries used by Subramanian will not stand the he scrutiny of academic or policy research standards and commenting that as Subramanian occupied a high seat of Indian economic planning, data sources will not be discussed in the paper.
"The author mentions that the motivation of his paper is not political and is focused on technical aspects. However, given the fact that his paper lacks rigor in terms of specific data sources and description; alternative hypothesis; rationale of equation specifications, use of dummies, and robustness-check diagnostics of estimated equations; and choice of countries in the sample and a specific list; it would not stand the scrutiny of academic or policy research standards."
The paper also state that Subramanian's paper while not peer-reviewed should be taken for consideration while pinpointing several factors in his paper such as Cherry-picking high-frequency indicators, Right data, wrong conclusions, Alternate explanations to a mismatch between high-frequency indicators and GDP growth, An unusual econometric exercise with unworthy results, Institutional bias against the CSO,Misplaced hypothesis, methodology and analysis of India.
It also concludes that while GDP estimation is not a perfect science as stated by Subramanian too, and his attempt to suggest that the growth numbers are over-estimated confirms that the estimation process is robust to spurious criticism adding that India’s GDP methodology is consistent with internationally accepted standards. It also adds that to approximate GDP of such a country on the basis of some correlations and four variables using simplistic econometric techniques is demoralizing and technically inappropriate.
Here is the link to the entire paper: http://eacpm.gov.in/wp-content/uploads/2019/06/EAC-Paper_GDP-estimation_19-June-2019.pdf
Previously on June 11, the former Chief Economic Adviser had deduced that India’s economic growth rate has been overestimated by around 2.5 percentage points between 2011-12 and 2016-17 due to a change in methodology for calculating GDP. He had further said that while official estimates pegged average annual growth during this period at about 7%, the 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 the new GDP series, its controversies and the policy implications of having false data.
The Centre had announced immediately afterwards that it would examine the estimates made in the paper and come out with a point-to-point rebuttal in due course.