Gujarat govt blames self for poor GSDP growth: 'Data wing didn't capture industrial growth'

By Rajiv Shah
Rattled by a relatively poor Gross State Domestic Product (GSDP) growth rate in recent years, two senior Gujarat government officials, ably assisted by an Indian Institute of Management-Ahmedabad (IIM-A) expert, ironically, have put – to quote them --“big question marks on the credibility of the state income estimation and hence on the Directorate of Economics and Statistics (DES) in the state”. They say this in their recent paper, “Measurement Issues in State Income from Registered Manufacturing Sector – Case of Gujarat”, published by IIM-A.
While the IIM-A expert is Prof Ravindra H Dholakia, known for his neo-liberal approach and strong support to the Gujarat “model” of development, the government officials whom he assisted in coming up with the argument, revealingly, are with the state’s powerful statistical wing, DES – Manish B Pandya and Payal M Pateria. Clearly, known to be an excellent economist, without Prof Dholakia’s assistance, the two officials would not have been able to arrive at the conclusions drawn in the paper.
Also laying blame on the state’s industries department for not doing enough to ensure that the contribution of Gujarat’s manufacturing sector to the state’s economic growth is properly calculated, the paper says, “the primary responsibility” of updating the census sector on industries “rests with the office of the Chief Inspector of Factories in the respective state governments, who provides it to the state based Field Operations Division of National Sample Survey Office” of the Government of India.
The paper suggests how the state government is particularly rattled when Gujarat’s poor growth rate in the media. It says, “A substantial revision in manufacturing income leads to major revision in aggregate GSDP and hence in annual growth rates. Such revisions, therefore, become the target of serious criticism by media and doubts are raised on the integrity of the estimation of GSDP as a whole.” Newspapers highlighted how Gujarat government claim of double digit rate despite recession had fallen flat, and single digit growth rate was becoming a norm.

Three of six years was single digit growth in Gujarat

Among discrepancies in data collection, the paper says, these include “inadequate and highly misleading for preparing the quick estimates of state income” in Gujarat, where “more than 1000 units remain uncovered by the ASI. They account for almost 23 per cent of the net value added (NVA) in the sector reported by the ASI. Thus, the official estimates seriously under-report the NVA from the registered manufacturing sector.” It advises “urgent need to correct this situation.”

The paper says, “There are about 3068 census sector factories as per the list of State Industrial Extension Bureau (INDEXTb) in Gujarat, while, as per the ASI frame of Census sector as used by the Industrial Statistical Wing of the Central Statistical Organisation (CSO), Kolkata, there are 1950 census sector factories surveyed during 2011-12. Thus, about 1118 factories consisting of nearly 780 large industries and 338 medium industries having more than 100 workers are left uncovered by the ASI in the state."
It elucidates, the data of 338 medium industries did not find a place in ASI classification, though it was “possible to identify” the industry groups. Of these, 187 “were chemical industries, textile industries, paper industries, gems & jewelry and metal industries”, and the “remaining 151 industries” were either as exports units or processors units. The value added per worker (CAPW) for these industries “worked out at Rs 4.55 lakh.”
“By multiplying Rs. 4.55 lakh of VAPW with the workforce of 36,377 in the 151 industries, the NVA is estimated at Rs 165515 lakh. Thus, in the aggregate, the NVA estimated from the uncovered factories on a conservative side amounts to Rs 19,792.70 crore and remains uncaptured for Gujarat under the present frame of ASI, Kolkata… The uncovered NVA works out to 23 per cent. Thus, proper reporting and estimation would raise the GSDP in the manufacturing sector by at least 23 per cent in Gujarat”, the paper concludes.