In variance with the official growth story (What numbers tell, and what narratives do)

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 In variance with the official growth story (What numbers tell, and what narratives do)

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Read more on - Polity | Economy | Schemes | S&T | Environment

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• A question of numbers: The huge growth years of 2001-2011 petered out, but then NDA-2 claimed it had turned the economy around by 2015. Logic given was that "a consumption-led growth model was driving it, and not an investment-led model of previous decade".
• CSO's 2015 series: The 2004-05 base year was changed in 2015, to 2011-12 by Central Statistics Office. GDP rates in new series suddenly went up, raising many doubts and suspicious. Why? Because many economic correlates showed a downtrend (bank credit growth, capacity utilisation, growth in fixed investments).
• Strange 2016-17: Despite a huge hit to both output and employment due to demonetisation, the higest GDP growth of 8.2% was recorded (for a decade). CSO junked all criticism stating – (a) they use global templates, (b) larger data sets were used, and (c) better methods were employed.
• Logic given: GoI said that new series did justice.

1. Earlier, the digital economy's dynamics were not captured (Ola, Flipkart)
2. Schemes like MUDRA and UDAN too were left out
3. Membership rise in EPF and ESI were shown as proofs of formalisation and employment growth (EPF - Employees' Provident Fund, ESI - Employees' Social Insurance)

• Formal sector: Since it is less than 15% of the whole economy, it doesn't matter much in above logic compared to informal sectors (rural and urban).
• Many changes in surveys:

1. The earlier-used 5-yearly NSSO household surveys would capture economy-wide measures of employment and household consumption. It was scrapped. (NSSO - National Sample Survey Office)
2. The new PLFS replaced the NSSO's EUS (Employment Unemployment Survey) was conducted for 2017-18, but report was rejected. Later, it was accepted in May 2019.
3. A separate household consumer expenditure survey too was done in 2017-18 (CES).

• PLFS report: It indicated that unemployment rate was now 8.3% of labour force (highest in 40 years). Total employment had gone down too, from 2011-12 to 2017-18 by something between 66 lakh to 1.55 crore. Wages had stagnated everywhere. GoI said PLFS is not comparable to EUS!
• Logical corollary: If labour markets are so stressed, private consumption would slump. That is what the CES showed clearly - monthly per capita expenditures had fallen for the first time since 1972-73. From Rs.1501 in 2011-12, it went down to Rs.1446 in 2017-18. GoI scrapped the report.
• Conclusion: All Surveys are unanimous that economy has entered a dire state, with job losses, stagnant wages, and slumping consumption. But GDP rates show 5% to 6% growth, on average. Are they reliable at all now?
• The truth: The dangerous truth may be that actual GDP growth may be very different from the claimed rates. Many macro variables are not tallying with the official GDP growth rates. The GoI shuns all such analyses. 
• Summary : The statistics are painting a different picture from the official claims about GDP growth in India.

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