Ministry of Finance has addressed concerns regarding the credibility of Indian GDP (Gross Domestic Product) data, particularly in light of a 7.8% increase in the first quarter of FY 2023-24.Several experts have pointed out discrepancy in India’s GDP statistics, which present a positive image of economic growth on billboards, while underlying issues such as rising inequalities, job scarcity, and a decline in manufacturing jobs persist.
Concerns Raised with Respect to GDP Numbers
Discrepancies in GDP Calculation
- An analysis of the GDP expenditure components reveals a concerning trend where most elements have decreased as a percentage of GDP.
- This includes private consumption, government spending, valuables, and exports.
- Imports have slightly increased, while Gross Fixed Capital Formation (investment in assets) and Change in Stocks (inventory changes) have remained stable.
- Therefore, there is an unexplained gap in the GDP calculation, which raises questions about the accuracy of the reported economic data.
Dual GDP Calculation Methods
- India’s GDP is calculated using two distinct methods: Economic activity (at factor cost) and Expenditure (at market prices).
The factor cost method assesses the performance of eight different industries. The following eight industry sectors are considered in this cost
- Agriculture, forestry, and fishing,
- Mining and quarrying,
- Manufacturing,
- Electricity, gas, water supply, and other utility services,
- Construction,
- Trade, hotels, transport, communication, and broadcasting,
- Financial, real estate, and professional services,
- Public administration, defense, and other services
Impact on Public Perception
- Experts express concern that presenting an overly positive image of economic growth through GDP figures can mask the economic struggles and challenges faced by a significant portion of the population.
- This can impact public perception and policy decisions.
Outdated Data Sets and Delayed Census
- One of the major concerns is the usage of outdated data sets in the calculation of GDP, which may not accurately reflect the current economic scenario.
- Additionally, delays in conducting the census contribute to potential inaccuracies in economic assessments.
- There are concerns that the methods employed may not effectively capture the complex and evolving economic landscape, leading to potentially skewed GDP figures.
Allegations of Government Interference
- Allegations of government interference in the calculation and release of GDP figures have surfaced.
- Experts worry that political motivations might influence the presentation of economic data, impacting its accuracy and reliability.