Saturday, March 04, 2017

Real GDP growth 5%; Modi govt "doctored" data to arrive 7% rate, revising base figure, ignoring demonetization

By Our Representative
Prof Prabhat Patnaik, one of the topmost Indian economists, has revealed that the Government of India’s Central Statistical Organization (CSO), while announcing 7% gross domestic product (GDP) growth for the third quarter of 2016-17 (October-December 2016), did this by “revising downwards the base upon which this growth-rate is calculated”.
Calling it a clear case of “doctoring of statistics on the part of the CSO at the behest of the government”, Patnaik says, this manipulation automatically led to a surprise “jump in the growth rate from 6.2 to 7 percent”, a point noted by no other than Soumya Ghosh, who is the chief economic advisor of the State Bank of India.
Pointing towards how this was done, Patnaik says, “The GDP figure for the third quarter of 2016-17 (October-December), when the impact of the demonetization of November 8 is supposed to have been felt, is estimated to be Rs 30,27,893 crore.”
The base on which this was calculated was revised downwards not once but thrice, Prof Patnaik says, and the whole idea was to arrive at 7% rate of growth. First the base – which is third quarter GDP for 2015-16 – as announced on February 9, 2016, was Rs 28,52,339 crore. Then on May 31, 2016, this figure was slightly revised downwards to Rs 28,51,682 crores.”
As both these figures would have meant a 6.2% growth-rate for 2016-17, Prof Patnaik says, finally, on February 28, 2017, “suddenly”, the base was further reduced to Rs 28,30,760 crore, getting the third quarter growth rate of 7 percent for 2016-17!
This, says Prof Patnaik, was not the only manipulation. Pointing that the CSO’s GDP is not based “value added figures taken from the producing units”, he says, they have been taken from company balance sheet data, leading to a “lower coverage for informal sector producers who are not listed as companies, and who are the ones that have faced the brunt of the impact of demonetization.”
Then, he says, following demonetization the trade channels “paid promptly to the producers through currency notes that had been demonetized.” This led to the producers making “larger tax payments than usual to the government in the form of demonetized currency.” And as the net indirect tax collections “were far larger than usual”, the CSO decided to calculate these as gross value added, “boosting GDP figures significantly”!
Concludes Prof Patnaik, “The 7% growth rate for the third quarter of 2016-17 claimed by the government which would come down to 6.2 percent if the base figure is not adjusted, would come down further if the under-representation of the informal sector in GDP estimates is taken note of, and would come down still further if the effect of arbitrarily large net indirect tax collections is additionally taken note of.” In fact, it would have been 2% lower -- around 5%.
Calling this “inversion of reason” unprecedented in independent India, Prof Patnaik says, “One just has to step out of one’s home to the grocery shop round the corner to acquaint oneself of the drop in business which the grocer has suffered owing to demonetization.”
Instead of recognizing this, one sees is a Prime Minister “targeting a person of Prof Amartya Sen’s eminence through some fatuous and meaningless remarks about Harvard and ‘Hard Work’.”
“It is like the naked emperor strutting around in his nakedness and ridiculing all those who had called him naked with the words: ‘See how wrong and stupid you were. My courtiers have shown I am fully clothed’!”

33 comments:

Unknown said...

All that one need to see is the explanation given by TCA Ananth who is far more professional than Prof Patnaik. As the Head of the State Planning Board in Kerala he hardly distinguished himself!

Anonymous said...

PM is destroying everything to make things look good.He is against a good India , manupultses everything in his ignorance and arrogance.Intellect and literacy has no meaning in his tenure but the officials go to any extent to make him happy.Why, is he a monarch ?Even monarchs go by the data ,The Democratic institutions have stooped to this PM and his vagaries destroying each brick of India on which if is built.

Mitesh Take said...

Too Sad

Tapas Jana said...

In last line of your statement you have disclose the reality, sir. It's really surprising how our national leaders can make people fool giving fake data in front of the world to conceal their unplanned decision.

Anonymous said...

But GDP method is changed since 2015. Nothing new.

M K Mathai said...

Manipulation was suspected on day one . but such obvious trick like lowering the base was not expected . simplicity indeed is the trademark of modi

Ramesh Matham said...

"Targeting a person of Amartya Sen's eminence", eh? Lemme ask you, Dr Patnaik, it is ok for Amartya Sen to call demonetisation "despotic", which is a harsh and personal comment, but it is terrible if Modi merely observes that hard work has got the better of Harvard?

Amartya Sen is free to say what he wants, but then so is Modi or anybody.
If Sen is open to attacking, he should be open to being counter-attacked.

As for GDP numbers, ok, let's agree that the government lied. Let us throw this government out and replace it with....whom? The ramrod straight, absolutely honest Congress? Or CPI(M), which has the credit of transforming the poor economy of West Bengal into a clone of the United States? Or, Bahujan Samaj Party, or AIADMK, or what?

An intellectual should not let dogma interfere with objective analysis.

Deshbandhu said...

http://www.thehindu.com/todays-paper/tp-opinion/cracking-the-gdp-mystery/article17420118.ece

vinod said...

Those civil servants who do not manipulate figures are not taken to HAG. They are pushed out. This is bureaucracy rule, CAG and other institutions are post analysis institutions and do not correct anything.

PM has most important task of keeping masses out of depression while doing corrective maintenance of society.

He will not even know that figures presented are manipulated.

Often Ministers to keep their performance figures high sacrifice honest approach.

Mandar Abhyankar said...

Another intellectual waste. No real value. Wasted my time reading this prof.

Mandar Abhyankar said...

Good for nothing.. Typically research type boring story. Waste of time...

Anonymous said...

The ram rod UPA managed better GDP for a better part of their rule at a time when crude prices were at it's highest. The lowest they got were in the last two or three years. At least they had highly rated economists planning it all and not some guy who passed a law degree. And the fact that the government fudged numbers to make them selves look good is a down right low. How people still fancy them is beyond belief.

Ram Mohandas said...

Statistics is a very interesting subject if you put one leg in ice water and other in a very hot object, you are having a balanced temperature according to statistics .but in reality it is otherwise as all will know.so don't go by that jargon.this is the simple case of politics being the root cause.if you are in opposition to BJP you can create a suitable statistical formula to suit your needs,if you are on the other side one can make another to suit your needs to satisfy the public who are not knowledgeable enough to understand the ploy one make

Aparna said...

I fully agree with you! Amartya Sent may have won a Nobel prize, but he did nothing for the Indian Economy!

Anonymous said...

FAKE NEWS.

KnowTheTruth said...

well, at least he did not harm the economy.

KnowTheTruth said...

do you find it more interesting to stand in queues all day to deposit old currency, and another day in withdrawing Rs.2500 ?

Premlesh Machama said...

These useless intellectuals are not doing any good to either India or its people. They are spoiling everything just because of personal hate they carry against Modi and BJP. This prof. has spent decades and decades of his life teaching economics, ask him what has been his contribution to India or can he list three things he has done which helped poor or needy to live a more respectable life. These are idiots and should be ignored.

Unknown said...

Largely comments based on prejudices not different from Patnaik's. Who is a CPM man

Clear Thought said...

1. A choice between two evils does not make the chosen evil good.
2. Most Indians voted for Modi just because they hoped he was the better evil.
3. As they say, one feels ones health, irrespective of anything else; we have only to look around and talk to a shop owner, a manufacturing unit owner or even a vegetable vendor. Ask them if their business has improved or gone down in the last two years and you will not have to look at the continuously declining PMI for last 7 quarters...
Assess dispassionately and you will feel the status of our economic and social health.

bhartendu said...

Yes, base GDP figures were revised, but if such revision was necessarily manipulation ? The writer has not thrown any light on that. Why Amartya Sen can not be attacked ? Because of his 'eminence' ? That is another ridiculous argument.

Unknown said...

If current PM Mr. Modi is against good India then who else among the PM in Congress has ever give a good India.Remember world history will surely recognise him as a legendary person for his long vision toward making India a developed nation. Free subsidy consuming narrow minded secularists which are facultative sanguverous parasites can't understand or behave as if they don't understand things

bigboss said...

Its not about replacing the Govt. Thats not the question here..if the govt is not to be replaced as yet, do we lose the right to question. However, the fact that u too admit that this Govt has lied is appreciable. This , indeed is the hallmark of this Govt of fake degree holders, Top to bottom. I do not expect them to fare better..

Anonymous said...

Mr Whoever!!, I wonder where were you all these years??? Never heard about you on any, Why only now? Where were you all these years?

bigboss said...

Why wont he know. What the troll army of bjp doing? Every other remark of this pm in up election originates from whatsapp intelligetsia(so called). Its pretty evident that he is a keen follower of social media. Media is today aflood with the data and articles about this manipulation. Will modiji take action against his fin min.

bigboss said...

Agree in toto

Ramachandran Vizhakat said...

Firstly NDA left the growth rate at above 10 level. So UPA had same momentum. Secondly Manmohan had very good governance support from NDA ruled states Gujarat Bihar madyapradesh, chatishgarh, jarkand Goa etc. these states growth rate were nearly gdp of 5 & above than other states.

surya said...

Absolutely true. Well said

Amit Tripathi said...

GDP is Gross domestic produce not gross domestic consumption.Talk on the grounds not in the air....
People used demonetized money to but medicines, food etc. So production had to increase

M Ramesh said...

I ask Prof Patnaik why it is ok for Amartya Sen to call Modi a "despot", but is wrong for Modi to even say "hard work is better than Harvard". Amartya Sen's harsh and personal words are "intellectual criticism" but Modi's mild riposte is "targeting an eminent person as Amartya Sen". What nonsense!
Does anybody have any counter to this?

Unknown said...

GDP base is always revised This is not first case. Highly incomplete and incompetent article

Romil Singal said...

This is not Modi calculation

http://www.thehindu.com/business/Economy/india-to-grow-at-77-in-2018-19-imf/article18413483.ece/amp/

Romil Singal said...

Base year changes in every 5 yrs. It was changed in 2010 by Congress govt to 2005 and now again after 5 yrs to 2010 by Modi govt. to match global trend.