Home / Business and Economy / Govt Defends GDP Figures Amidst Criticism
Govt Defends GDP Figures Amidst Criticism
2 Sep
Summary
- GDP revisions stem from series changes and improved data.
- Manufacturing's negative inflation due to input/output price deflation.
- GDP inflation differs from CPI/WPI covering the whole economy.
The government has refuted claims that revisions to last year's current-price GDP were made to inflate this quarter's growth. Instead, it stated that adjustments from ₹86 lakh crore to ₹80 lakh crore stem from changes in the GDP series, improved data, and successive revisions, particularly with the introduction of a new base year (2022-23).
These revisions are attributed to incorporating updated indicators and methodologies. The government emphasized that comparing figures from different GDP series, such as the old 2011-12 base year with the new 2022-23 base year, is not valid.
Questions regarding manufacturing's negative inflation (-1.5% implicit GVA deflator) were addressed. The government explained this arises when input prices rise faster than output prices, affecting nominal GVA calculations. This situation can occur in sectors like textiles and basic metals.
Furthermore, the article clarifies why GDP inflation, around 2.5%, differs from CPI (3.9%) and WPI (over 9%). GDP deflators cover the entire economy, including government spending and services, unlike CPI's household basket or WPI's wholesale commodities. Private consumption expenditure calculations do not directly use double deflation.
