We use cookies to provide some features and experiences in QOSHE

More information  .  Close
Aa Aa Aa
- A +

Across the aisle: Change begins with words and ideas

15 10 63
25.03.2018

Measuring growth is a problem. It is a bigger problem if you change the rules in the middle of the game. GDP is the gross domestic product. Keeping aside the nuances, it is the gross value of the country’s output of goods and services in a financial year. The output is valued in current prices as well as in constant prices (the latter are prices adjusted for inflation). In order to value the output at constant prices, the statistician takes a ‘Base Year’. Beginning 2004-05, the first year of the UPA government, the GDP was computed using 1999-2000 as the base year. After a few years, the base year was changed to 2004-05 but the methodology remained the same.

Serious misgivings

What the BJP government did in 2014-15 was to change the base year to 2011-12 as well as change the methodology. I shall not go into the details of the changes; suffice to say that when the Central Statistics Office (CSO) reports a growth rate of 7.5% in constant prices, many economists and analysts believe that it is perhaps equal to 5.5% under the UPA government. There is a simple way to put an end to the misgivings: the CSO should publish the growth rates from 2004-05 computed under the old and the new methodologies, so that people and users of the data can draw their own conclusions. For reasons that are inexplicable, the government and the........

© The Financial Express