In a staunch defense of its GDP data, the Finance Ministry issued a comprehensive rebuttal in the latest publication, countering critics’ doubts about the accuracy of India’s economic figures. The Ministry, led by Union Minister of Finance Nirmala Sitharaman, presented a 10-point response, debunking claims that nominal GDP was indicative of a feeble economic activity.
The Finance Ministry affirmed that India consistently relied on the Income Side approach for GDP calculations, emphasizing that there was no arbitrary switching between approaches based on favorability.
Critics had raised concerns about nominal GDP trailing behind real GDP, characterizing it as a new tactic to undermine the credibility of GDP numbers and portray economic activity as feeble. However, the Ministry argued that both indicators could withstand scrutiny.
India’s GDP deflator, centered on the Wholesale Price Index (WPI), had surged due to the Ukraine-Russia conflict’s impact on oil and food prices in the first quarter of 2022-23. The Ministry anticipated a return to normalcy as WPI contracted year-on-year.
The Ministry further contended that the temporary dip in nominal GDP would likely stabilize as WPI continued to contract. It refuted claims that nominal GDP was on the decline due to GDP deflator issues, asserting that such arguments were previously nonexistent.
Moreover, the Ministry cautioned against relying solely on Indian GDP data, noting that these figures undergo multiple revisions before being finalized three years after the relevant financial year’s closure.
Ultimately, the government pointed to positive outlooks projected by international agencies for FY24, emphasizing that these organizations would not have expressed optimism if the underlying economic activity were genuinely weak.
In response to critics, the Ministry encouraged cross-referencing conclusions with various growth indicators, including Purchasing Managers’ Indices, bank credit growth, consumption, and capital expenditure data.
It also noted that India’s growth figures might understate reality, particularly when compared to manufacturing growth reported by the Index of Industrial Production, which lagged behind what manufacturing companies reported.
In summary, the Finance Ministry’s robust defense of India’s GDP data sought to dispel doubts and highlight the nation’s economic resilience, reinforcing its commitment to soundeconomic policies.
