- 7 weeks ago
A national debate has emerged over India's first-quarter gross domestic product (GDP) growth figures of 7.8 percent, following criticisms raised by former Finance Secretary Subhash Chandra Garg.
Category
🗞
NewsTranscript
00:10good evening hello and welcome you're with the news today your prime time destination news
00:15newsmakers talking points friday night and we've got a special the gdp debate the last word over
00:22this week we focused on the gross domestic numbers were they right manufactured or real
00:31former chief economic advisor dr arvin subramaniam joins us former chief economic advisor kb subramaniam
00:38joins us two economists subramanian versus subramanian also the man who triggered it all
00:45off former finance secretary sc guard plus you'll have my take as to why i believe this has been
00:51such a critical issue but first as always it's time for the nine headlines at nine
00:59the goon right-wing influencers sir ford they fordia boast on a podcast backfires swatantra
01:08bardwaj who claim links with top politicians of the ruling party is detained by the delhi police
01:14from up's bulan chair sectioned under the scst act added to the fir the kokhrun janta party seeks an
01:22attempt to murder charge because it was during their protest that he claimed he had beaten the skull
01:27of a woman activist father
01:33hours after an aib preliminary report air india sacks the pilot of the delhi phuket flight after
01:40he tests positive for substance abuse air india maintains safety remains a top priority says
01:46pilots employment terminated with immediate effect
01:51rain fury in the national capital region on janmashtami flight operations hampered in delhi after a brief
01:58downpour at least 10 flights diverted entrance to the igi airport terminal three gets waterlogged before
02:05it's cleared after the penguin india rau sonia gandhi's memoir gets a new publisher harper collins india to publish the
02:15congress
02:16veterans memoir belonging book to be released on november 10th
02:22food safety crackdown in maharashtra continues fssai orders cg foods india maker of yy to stop production of vegetable
02:31bujya namkeen after an inspection at its ajmer factory found that broken noodles collected from the floor were being reprocessed
02:39into bujya
02:42amidst all the gloom a glimmer of hope for those
02:46searching for the missing in nepal 10 days after flood fury two men brought out alive miraculously
02:52from a tunnel rescue up more than 5000 people remain missing including 275 indians
03:00in an india today exclusive u.s ambassador sergio gore hails personal equation between prime minister modi and donald trump
03:07hints at the possibility of trump visiting india in 2027
03:14another feather in isro's cap as its gslb rocket launches india's first dedicated
03:20imaging satellite in geosynchronous orbit from shri harikota prime minister modi leads the nation in
03:27congratulating india's space body
03:31and india japan to celebrate 75 years of diplomatic relations with a game on the pitch
03:37team india to travel to sano for a one-off t20 match on september 22nd
03:59this week has been marked by a furious debate on the latest first quarter numbers for gdp released by
04:09the narendra modi government numbers which suggest that the indian economy is doing
04:13far better than the most doomsayers as the prime minister called them had suggested the discussion
04:21probably the first such on gdp numbers and whether they've been in some way manufactured or are they
04:27real was sparked by a claim made by the former finance secretary sc garg who said the actual growth may
04:35be well below the seven point eight percent claimed by the government today we will have the last
04:40word in a way on this debate we will be joined exclusively by two former chief economic advisors
04:47to the modi government dr arvin subramanian and dr kv subramaniam and the man who triggered the storm himself
04:55subha chandra garg but before we go let's give you a context of how this debate has become so acrimonious
05:03over this week
05:09narendra modi's government announces a seven point eight percent growth in the first quarter
05:32but former finance secretary subha chandra garg questions the numbers if you had taken the numbers which were put out
05:39last year as the gdp in current prices
05:43the growth is less than 2.5 in in current prices nominal gdp so that these two factors give me
05:52a kind of little bit of a doubt about whether 7.8 percent is genuine or not
06:00a furious debate follows the assumption that growth was 2.8 percent was ill-educated the person
06:08quoting it that was not that was not my allegation the growth rate would be 2.8 percent that i
06:14think
06:14is not a valid statement all quarterly numbers have to be taken with a pinch of salt there is no
06:21evidence
06:23to date we have played politics with the numbers congress questions the growth data
06:30how accurate are our growth numbers it's the last word on the gdp debate with rajdeep sadha say
06:38okay so we've set the stage for what we are calling the last word now on this long-running debate
06:45on gdp
06:47numbers my first guest is the very distinguished former chief economic advisor and also author co-author
06:54of a sixth of humanity independent india's development odyssey that traces india's economic history he is
07:02one of the country's foremost economists i'm joined by dr arvin subramaniam appreciate you joining us dr
07:10subramaniam before i go to the details let me ask you the big question that everyone is asking
07:18do you believe the gdp numbers when the government says first quarter numbers 7.8 percent which are
07:24then questioned by the likes of subash garg former finance secretary where do you stand on that big
07:30debate right at the very outset uh if you wanted a kind of reductive uh bottom line answer rajdeep
07:37that you're pushing me for um i would put it something like this the government is sort of half right
07:45uh technically and kind of directionally on the numbers i.e things are improving uh but on the
07:54magnitude of you know the 7.8 percent growth itself how it is felt uh the larger doubts raised by
08:03the
08:03critics i think the government has a lot to answer for no so so let's come to specifics because
08:10the argument which is being made by the government is that they have a new revised series and these
08:17numbers are based on the new revised series of 22 23 and not on the old series because subash garg
08:25had seemingly suggested that the government had brought revised last year's gdp from 86
08:32lakh crores to 680 lakh crores and that's why it's appearing like a 7.8 percent growth had they not
08:40done this revision therefore there would have been 2.6 uh nominal growth rate and real growth rate would
08:47possibly have been zero percent no i think razdeep on that i think pretty much everyone would agree
08:55that uh the 2.8 is based on a apples to orange comparison which is kind of not kosher you
09:04know
09:05let me explain that to viewers you're saying when you say apples to orange you're saying basically if
09:11you compare new series of 22 23 this year's numbers to if last year's numbers were extrapolated on the
09:17new series that would be a fair apple to apple comparison mr garg is using old series numbers to discount
09:24the
09:24new series yeah correct uh however i i think although on those kind of technical grounds uh subhaj garg uh
09:34maybe overstated his case or even misstated the case i think he's there's a kernel of truth in the spirit
09:42of
09:42what he's saying and let me explain uh what i think he's saying what he's saying is that you know
09:49the
09:49elephant in the room is that the government has a huge trust deficit it's created a huge trust deficit
09:57because across the board you know when it said in the demonetization year growth was 8.3 percent when
10:05all 86 percent of cash was withdrawn uh when it understated the covet deaths uh massively when it made
10:13exaggerated claims about open defecation so because it has this trust deficit subhash's point is that
10:22that revision that was done convinced me that that was not done in order to make the current numbers look
10:32good now it's possible that the government is a good defense for why it revised those numbers downwards
10:38but because of this trust deficit deficit we cannot prima facie trust the government unless it comes out
10:47and makes clear what are the objective data methodology reasons why it revised it downwards so i think that's
10:57the heart of i think what uh uh subhaj garg is trying to say and it has resonated and touched
11:04a raw
11:04on earth because of this broader trust deficit in fact you've said that in an indian express article
11:10that you've just written that the government's handling of data in the last few years has created a
11:15fundamental trust deficit you mentioned how the census has been delayed the 2017 consumption survey was
11:21withdrawn debts from covet was seriously understated and exaggerated claims were made about open defecation
11:28so there is of course the belief that one has to therefore now look at trust but verify that's
11:34become the approach so we need to verify these numbers no no no no no no no no no no
11:40i think the
11:41normal would be trust and verify but because of the government's track record it is doubt first
11:47and then show me that my doubts are misplaced so the burden of proof is now on the government
11:53okay so one of those one of those doubts is how did 86 lakh crore come down to 80 lakh
12:00crore uh you
12:01know why is there downward revision do you have a uh clear explanation do you believe the government or the
12:07ministry of statistics has given a clear explanation as to how was there such a major downward revision
12:13see uh uh one has to distinguish the government i think has you know really
12:21not made available made public beforehand let's leave aside the clarifications that they tried to
12:30give post facto but beforehand i think all of us who monitor this very closely were wondering where is the
12:38detailed description of the data the methodology not just for the construction but also for the revision
12:45of the data and because it didn't make it clear explicit public ex ante is again it reinforces that
12:54trust deficit now to be fair to the government rajdeep i think there could be good reasons or at least
13:01plausible reasons for bringing that number down for example uh informal sector data became available post
13:08facto informal sector grew much more slowly and therefore it's possible but the government should have done all of
13:14this beforehand and not kind of scrambled to come up with explanations when it was kind of kind of uh
13:21put on the spotlight after the numbers came up so what you're saying is this issue could have been
13:28resolved you're not quibbling with the methodology of the new series the new series the government claims
13:34is far more robust in its methodology in capturing uh uh the the various uh changes that may be taking
13:42the
13:42various elements that have been put into capturing data do you have a problem with that or do you have
13:48a
13:48problem with the lack of transparency or both uh certainly with the lack of transparency but rasteep i think even
13:57on the first uh it's a very important point that uh abhishek anand josh feldman and i make in this
14:04paper
14:05so take the 7.8 number that the government says right one of its defenses for the 7.8 is
14:13to say look
14:14all of you guys you are missing the fact that you know exports have done very well credit has done
14:21very
14:21well auto sales have done very well uh sales overall have done very well so a lot of the other
14:29supporting
14:30macro indicators have done well and therefore you should believe the 7.8 number now that's not an
14:40unreasonable point at all but this is what then we say and we show in this piece but if you're
14:47going to
14:48support the quarter one numbers on that basis apply the same logic to the numbers of the previous three
14:56years and the numbers break down because if you look at 2022 to 2025 growth average growth is similar
15:03about 7.6 but if you look at all the other indicators sales absolutely non-existent exports very poor
15:13credit very poor so so what we end up saying is that if you want to be believed not only
15:21should you
15:21make everything explicit you should also come clean and acknowledge you know the kind of uh overestimation
15:29in the past because your logic is believe us because these other indicators are doing well
15:35but then you showed the same gdp growth numbers in the past when all those other indicators did did not
15:43even remotely as well so we say what's source for the goose today has to be source for the gander
15:51for the previous figures and in fact this has been our consistent criticism of the gdp numbers for
15:59the past 15 years so the government cannot have it both ways yes the current numbers may be plausible
16:05at least in a directional sense i.e things are improving but if you claim it's 7.8 percent based
16:12on
16:12these other indicators well apply the same logic to the previous numbers as well because the government
16:19as you said on macroeconomic indicators including private sector private investment and manufacturing
16:24claims that there is an upward swing so they are actually uh trying to back up this 7.8 percent
16:31by
16:31saying that there is uh consumption is is doing better uh uh investments are doing better manufacturing
16:37is doing better they point out to auto sales but you seem to suggest that the numbers seem decoupled or
16:45separate disconnected from the felt reality and economic reasoning now among the economic reasonings
16:52you cite is the energy shock uh post what has happened of course in west asia you say it is
16:59difficult to understand how the economy could have done so well in the face of the energy shock now
17:04that's a subjective view that's not an objective view when you say that numbers seem decoupled from
17:10felt reality and economic reasoning that people would say that is arvin uh that is arvin subramaniam
17:16and his researchers uh uh subjective view it's not objective no uh let me push back a little bit
17:26it's certainly in terms of the felt reality that's somewhat subjective right because uh but then uh you
17:33know the question is if gdp growth is so high why is there no employment growth why are wage growth
17:40is
17:41so weak why is private investment so weak and above all why is there so much unrest anxiety amongst the
17:49poor you know if any country is growing at eight percent razdeep consistently no matter how k-shaped it is
17:57it has to be felt by the common man so so it's not entirely subjective now let me go sorry
18:04sorry
18:05sorry let me push back a feel good factor arvin subramaniam is is subjective right in a country of 1
18:10.4
18:10billion people to say that you know there is unrest there are pockets of unrest that means that the
18:15economy couldn't be growing at 7.8 percent is subjective it's political well it's not entirely
18:22right because it's backed by the fact that employment opportunities are weak objectively
18:29wage growth is very weak objectively fdi has been declining objectively uh the rupee has been under
18:37you know uh what people don't realize is that if you're growing at eight percent consistently for
18:43three to four years as the government is claiming why have investors fled the country that's objective not
18:49subjective so so so so the feel good factor is part what people feel but it is backed up by
18:57a lot of
18:57associated numbers as well which kind of mirror the felt reality but coming to your second thing about
19:03the economic shock the energy shock now we have a chart in this so just to give you a number
19:10razdeep
19:11uh this quarter uh the oil price for india was about 101 dollars per barrel for the import uh imports
19:20that india does in the same quarter the previous year it was about 67 uh dollars so it's about a
19:2750 percent
19:29increase on energy imports which account for about uh you know a 2.53 percent of gdp that means the
19:39oil
19:39shock has affected uh oil natural gas fertilizers and even though the government did a very good job
19:48of shielding consumers from it producers who used that their costs went up uh you know their uh
19:55profitability was affected and therefore that had an impact so the our argument is is you know the
20:02following uh uh there's this big energy price increase which we call a shock now uh what you
20:11would say is that the government handled it very well and the economy proved resilient that's a fair
20:18argument but what the numbers show is that no no it was not just resilience that we showed that we
20:24boomed
20:25in the wake of the energy shock because compared to growth last year the growth is even higher by one
20:31percentage point now surjit bhala for example says but worldwide uh there's been this resilience but
20:39remember razdeep worldwide you take south korea taiwan they or even the united states they've yes they
20:48have faced the energy shock but they have boomed because of this ai boom brazil has boomed because
20:54commodity prices it's a commodity exporter india is a commodity importer and does not have this ai boom as
21:01well so to say that we were resilient is one thing but no no in the wake of the shock
21:06we actually
21:07boomed and surged that kind of strains credulity you know which brings me to my final point because
21:13you said that the challenge therefore before the government is to rebuild public and expert confidence
21:20in the data uh you know you've said that what really is being pointed towards is a trust deficit in
21:27fact i
21:27say that we should have a gross trust deficit index a gtd index in the future how do you restore
21:34credibility in your view should the government now immediately release the complete sources and method
21:40document to explain how exactly the gdp was calculated and importantly how it's revised would that be a
21:46starting point how do you ensure that the government restores credibility in these numbers well because
21:53you sound skeptical yeah the answer to that uh razdeep there's a kind of there's a narrow response
22:01and a much bigger systemic response right the narrow response is on the gdp just now come clean on
22:10everything put out every number every data point every explanation for how it was done how it was
22:16revised you know uh what were your what was the in fact for example the government says it does double
22:22deflation now do we really know how much it does double deflation do we know which prices are being used
22:30so
22:30come clean on all of this i mean absolute total transparency that's the narrow point but i think the elephant
22:38in the
22:38room is the bigger trust deficit you know no government can say trust me i will do the uh gdp
22:47better but then on the other issues you know i will still kind of you know be slightly economical with
22:53the truth or suppress the truth whether it's in the electoral process whether it's on covet deaths so
22:59that is a bigger issue that's part of the dna of this government and can people can governments
23:06politicians ruling parties change their basic dna that's an open question okay so it's interesting
23:15the way you put it because i think you're giving us an important context what you're saying i'm
23:20summarizing you at the end you're saying that it's uh you would be inclined to give the government the
23:26benefit of the doubt when it comes to the downward revision and the new revision series but what you're
23:32saying is because this government suffers from a major trust deficit in your view when it comes to
23:36data in particular because the fact is that the economic reality is on the ground the way they've
23:42built up over the last few months particularly the energy shocks that we've suffered and because the
23:47government has not released the sources and methods document by which this gdp was calculated
23:53there is a question over transparency and therefore while you disagree with subhash garg on that 2.8
23:59percent number you're saying at least he is giving you a direction as to the importance of restoring
24:06trust and credibility in the figures being put out am i more broadly correct so so let me put this
24:13in
24:13this you know we wrote this piece you know kind of somewhat uh provocatively as a garg versus garg debate
24:20right uh the the the current government garg versus the ex-government garg and the current government
24:27garg for our viewers is the uh is the secretary ministry of statistics and program implementation
24:32yeah and they both you know i've worked with both of them they're very competent and i've
24:37very high regard for both of them but what i would say is that um not only must you do
24:45all that you've
24:46done what you've said release all the data be transparent you know but also please come clean
24:54and acknowledge that if what you're claiming about today is right then all that you've claimed about
25:00the past needs to be revisited so even under the new cds we were not growing at seven and a
25:07half percent
25:08as the government claims so also come clean and be honest about the past and that would embellish
25:15their trustworthiness credentials and particularly 2016-17 which was demonetization year where the
25:22government then claimed that they were the economy was booming at eight point two percent at the time
25:28arvin subramaniam for joining me on the show today and giving us your very lucid explanation
25:34on the gdp numbers appreciate you joining me thank you very much thanks rajee okay we've heard from
25:43one dr subramaniam let's now turn to another dr subramaniam and also someone who's been a former
25:49chief economic advisor kb subramaniam joining us he was chief economic advisor not too long ago with
25:55this narendra modi government good to have you on the show uh mr dr subramaniam where do you stand
26:01on this entire gdp controversy wherein it has been suggested by the likes of subhash garg who's
26:08made all the headlines former finance secretary claiming that if the previous year's nominal gdp was
26:14not revised from 86 lakh crores to 80 lakh crores under a new series the nominal growth would have been
26:20only 2.6 and if you factor in inflation real growth would be zero
26:27um rajdeep i have no hesitation in saying and i've actually tweeted about this as well that that
26:352.6 percent claim is absolutely bogus um it is ridden with egregious conceptual errors which i have
26:45highlighted um you know in in my tweets let me explain for the benefit of the viewers you know what
26:50what what what is really happening here um so as as uh you know i'm sure by now our viewers
26:57know
26:57that uh in 2026 uh in february of this year actually the gdp methodology was revised and you know when
27:06i was part of imf actually i was involved from the imf side in you know aiding this process you
27:12know in
27:13shepherding that process so now we have the double deflator syndrome uh you know which is the cutting edge
27:18it is a global standard as part of that can you just explain the double deflator as to why you
27:25believe because we've got pranap sen the first chief statistician today uh that the country had the
27:30former chief statistician claiming that double deflation is theoretically sound only if you have
27:37sufficiently comprehensive reliable information on both output prices and immediate input prices but
27:43explain that so let me give an example um you know and the example i'm giving is you know so
27:52that
27:52people can understand it's khichdi but there is no khichdi being made here let's make it very clear
27:58let's say rajdeep you go and buy a bowl of khichdi and it costed 100 rupees last year and it
28:05required
28:06rice and dal which together costed let's say 70 rupees 35 rupees each now rice and dal are the inputs
28:12and
28:12khichdi is the output suppose the price of khichdi goes up by 10 percent you know for the same bowl
28:18of khichdi you need to pay 110 rupees and let's say the price of rice and dal have gone up
28:23by five
28:23percent then you know you actually need to deflate each one of them at their respective prices which is
28:29exactly being what you know what is being done and in fact having been part of the imf this was
28:35one of
28:35the aspects that the imf wanted improvement on to ensure that the output and the intermediate inputs
28:42that go into production are deflated at their respective price levels so this is an improvement
28:49as for the data and i think the secretary or you know current secretary who himself is a phd in
28:57economics and somebody who actually understands this really well i've interacted with him as well
29:02and he's given an interview where he's clarified very clearly so you know the current person who
29:08who's on top of all of this compared to somebody who was there let's say more than a decade earlier
29:12has clarified so i think i trust that now let me finish the point that you asked me the first
29:17question that you asked me because that is what our viewer the bottom line that viewers would care about
29:21you know what the 2.6 percent that was arrived at was by doing you know arithmetic that even a
29:29high
29:29school kid would not do which is to take kilograms and pounds there's incidentally i use this example
29:34and i introduced that now there's a meme there actually that's coming around you know it's
29:38saying oh i measured my weight in pounds last year this year i'm waiting measuring my weight in
29:43kilograms and saying oh hooray i've actually you know lost weight that is the kind of arithmetic that
29:48leads to that 2.6 percent estimate which is absolutely so you're saying it was not you're saying it was
29:54not an apples to orange or pounds to kilograms uh a comparison uh comparison it was uh it is that
30:01is
30:01what subhash gharag did you believe he compared apples to oranges pounds to kilograms but the question
30:07that is arising is that when this revision took place under the new series uh the nominal gdp is revised
30:15from 86 lakh crores to 80 lakh crores it goes down shouldn't the government provide an explanation as to why
30:21it went down so rajseep and here i think understanding the chronology is really important
30:27this change happened in february of of this year and that was publicly announced i remember actually
30:34and let me make it very clear to you and the viewers i'm an academic who's actually just been
30:38tracking you know as somebody who's actually has interest in this now it was put out in february
30:43so any insinuation that this number was lowered now to actually show the gdp higher there is no way in
30:50february they would have known what the number you know what would be in in in september or in the
30:55end of august so i think that insinuation let's set aside because it doesn't make any sense it
31:00chronologically clearly does not satisfy now second point that i want to highlight here these kind of
31:04revisions actually happen in every country and let me give you an example i've written an article in
31:10in the times of india in december of 2024 using discrepancies and revisions in the united states
31:16actually let me give you for the benefit of the u.s in the two to eight quarters in 2023
31:21-24
31:22the discrepancy between gross domestic product and gross domestic income in the u.s was 800 billion
31:29dollars 800 billion dollars 2.5 percent there was no politics you know that happened as a result of that
31:35that is what is actually taken gdp is measured we're using proxies and revisions happen and there is i think
31:42nothing more to that there is in fact it's very unfortunate that people with basically whatever
31:47you know motivations they have they end up creating a controversy about this this is just pure economics
31:53that should be left to economics rather than any politics so you're saying that the downward revision
31:58is not exceptional it is actually because the data now uh collected by the government is even more
32:04rigorous am i correct yes particularly factoring in informal sector for example exactly exactly and you know
32:12also i think let me let me add to that because what has happened and our viewers need to understand
32:17especially an economy like india which is growing very fast the structure of the economy changes very quickly
32:23so for instance the digital economy that was not there 10 years back is now there and you have to
32:28measure measure that and a lot of that also there is informal sector also changes happening
32:32so when you do that by the way it's also important to yesterday's times of india had a very nice
32:37nice graphic which showed that revisions in the past have both been upward and downward and this
32:43revision here as well could be possibly when the next number comes could be upward or downward there
32:47is nothing you know more than that okay uh dr arvin subramaniam said where he has a question mark is
32:54that the and where the problem comes is the government's handling of data the modi government's handling of data
33:00has created a fundamental trust deficit he pointed out for example 2016-17 year of demonetization
33:06official data showed growth accelerated to 8.2 percent in a year when 86 percent of cash was withdrawn so
33:14he's saying that this is all pointing to a trust deficit economists may may argue on numbers but there
33:21is a fundamental trust deficit do you agree with that so let me take this opportunity to actually say that
33:27those who sit in glass houses should not be throwing stones at others the reason i say this
33:32is that you know arvind's own estimation and let me explain to the viewers he back in 2019 you know
33:39claimed and there are bbc articles there's also in an ncr speech where he claimed that the gdp is overestimated
33:46by
33:462.9 percent since then it actually a recent article it has come to between 1.5 to 2 percent
33:52and let me explain this for the benefit of the viewers if indeed the gdp was let's say overestimated
33:58by 2.9 percent then the from 2011 till 2026 when the revision happened the actual gdp should have been
34:07written down by almost half 47 percent what was the actual revision the actual division was 2.9 percent
34:14so somebody who's you know his own estimations are absolutely not trustworthy and i say that with absolute
34:20responsibility as someone who's written an article debunking his claims actually i don't think you
34:25know him talking about trust does not seem to make any sense at all but the fact is that these
34:31are
34:31serious questions is isn't it a consumption survey was withdrawn unemployed no no in 2017 consumption
34:37survey was withdrawn debts from covet was seriously uh understated government was accused of making
34:42exaggerated claims on open defecation all of this has led people to have doubts do you concede that or
34:50not look i am not part of government here and i think this what about that we are actually being
34:55in we are indulging in that is not we should be what we should be doing let's focus on the
35:01point let me
35:01allow me to actually talk about a few more indicators let's focus on the 2.6 percent give me a
35:06couple of
35:07minutes here rajdeep without interrupting uh if you look at consumption and investment with two most
35:12important things that together account for 90 percent of gdp in the economy let me share some statistics on
35:18consumption if you look at passenger vehicles transport vehicles each of these are growing in
35:23double digits some of them in high double digits when you look at investment and this is a city group
35:28report not a government of india report which looks at the capital expenditure that is being done by
35:33listed firms that has increased by 12 percent the government's own data shows that it you know
35:38investment has increased by 11 percent bank credit rbi data has you know shows it has increased by 20
35:44percent if you look at the index index of industrial production on cap for capital goods that has
35:49increased by 16 percent construction has increased by 15 when you put it all together you know even a
35:56high school kid who knows it's his arithmetic can say how can you look you know how can that be
36:002.6
36:01percent when you are doing averages with double digit numbers okay so therefore let me ask you this
36:06then some of these numbers and you threw some of them up will be uh are suggested are decoupled from
36:12felt reality and economic reasoning according to dr arvin subramaniam and his researchers because
36:18it's against the background of tepid uh wage growth poor job creation sagging stock market currency under
36:26intense pressure and energy shocks which we've suffered in the aftermath of west asia war in that
36:31scenario to then say it's 7.8 percent is seen to be decoupled from the felt reality and economic
36:38reasoning shouldn't therefore the government be providing to rebuild credibility complete sources
36:43and methods document as to how they reach these numbers because the concern is the anxiety on the
36:48ground and the reality on the ground seems decoupled with these numbers let me if you will allow me i
36:54can actually explain each one of these um the what about me that is happening let's start with employment
37:00um you know there is a law called okun's law which shows that the correlation between employment
37:07growth and gdp growth is not one for one and let me be absolutely honest here and acknowledge that
37:13if you look at the plfs data on employment employment growth has been around five percent
37:18compared to around seven percent real average growth employment growth has lagged behind that is there is
37:23something that is you know need to focus on but that is not using that to actually say i don't
37:27trust
37:28the gdp number is absolutely not correct secondly as for stock markets i am somebody i'm a finance
37:33professor who teaches you know stock market valuation for a living and i teach students that today's
37:39stock market value is based on the present value of future cash flows it is future what is happening
37:44the market energy shocks what is happening energy shocks yes i'm coming to that but let me finish this
37:51point because it's so important that you know correlation therefore with stock market is not necessarily
37:57you know there as for energy shocks of course i think that is an aspect that india has to focus
38:02on
38:02if you look at the the the proportion of energy that is now that's renewable now india has now about
38:09fifty percent of it so i think these despite these shocks because investment has risen consumption is
38:15rising as well the numbers clearly line up now i think let me for the benefit of viewers this is
38:20classic what happens let me just take 30 seconds to explain the kind of the template that is used by
38:26those you know the perennial pessimists what is done is if the number is gdp number is low
38:31it's trusted then and there no question no deflators no real income real nominal etc but when the number
38:38is high that's when all this you know chemistry happens with real with deflators and real and
38:44nominal quantities and and like you're doing which is the number is high okay what about x what about y
38:50what about z this is the kind of whataboutry that gets done rasteep i think for the interest of the
38:55nation it is important i can tell you i've been there exactly where arvind was that india's gdp
39:02numbers are absolutely trustworthy you will see in the imfs you know assessment that will come also
39:08because people say imf gave us a c rating and i've been there imfc's rating was based on three sub
39:15indicators which were basically only the coverage part was c rest of it was one was k and another b
39:21on
39:22timeliness and on overall depth of indicators it is the fact that this will improve because
39:27and that was because the the the base here itself being being you know very old which has been fixed
39:32now so bottom line bottom line let me let me for the benefit of the viewers bottom line is i
39:37trust
39:38these numbers it is it may be slightly more or slightly less than 7.8 percent but it is not
39:432.6
39:44nor is it five percent for sure very quickly rebuilding credibility because many believe
39:50that you need a credible story backed by economic research to explain what caused the economy to
39:56accelerate amidst these energy troubles for example if the economy was booming why did nominal jet net gst
40:03revenue grow just by five percent even allowing for gst rate cuts why did import volumes fall how could
40:10the manufacturing how could the manufacturing deflator have been negative when rbi data shows that
40:16business margins have actually improved should these questions not be answered of course and i think on
40:21the manufacturing please ask your viewers and i tell the viewers go and listen to a very nice interview
40:26that dr subhaj the current mospi secretary has given explaining that very clearly because you will not
40:31give me time i'm not going to get into that right away but let me say that the gdp numbers
40:36are you
40:37know are are are absolutely trustworthy and here let me put the onus on those who actually where
40:42when they were in government they were singing to one tune when they're outside of government
40:46sitting to another tune if they are honest in their assessments it will really enhance the trust
40:51that there is on actually you know on on on the on the national but these questions should be answered
40:56but either way these questions should be answered up front okay absolutely absolutely and that is
41:02the government and we need a complete sources and methods document from the ministry of statistics
41:09i hope so that independent economists can discover how the numbers were devised and reassure the public
41:15that the data makes sense professor kb subramanian does make sense okay the data does make sense i take
41:21your point subramanian versus subramanian thanks very much kb subramanian for joining me thank you my
41:27pleasure okay so we've heard two former chief economic advisors give very different uh views in
41:33a way on the gdp numbers uh we've also heard from several economists over this week here on the channel
41:40some very fine voices but we thought that the last word at the end of this week should be to
41:46the man who
41:46started it all the former finance secretary subash ghar now joins me appreciate your joining us subash
41:52you become quite a uh viral star if i may say so i don't know whether that's what you wanted
41:58on twitter
41:58everyone's talking about you everyone wants to know who subash ghar is but when i've spoken to a range of
42:04economists including critics of the government and i've seen their interviews in business newspapers all of
42:10them seem to suggest that subash ghar may have got the numbers wrong by comparing apples to oranges
42:18you took numbers from the old uh series compared to the new series when you should have done an old
42:25series to old series comparison while suggesting that the indian economy's normal growth rate could
42:31come down to 2.6 percent under uh is what you believe was the accurate number and the real growth
42:39would be
42:39close to zero if you factored in inflation are you willing to do a mia kalpa that maybe you exaggerated
42:45this 2.8 growth rate or 2.6 percent so razeeb thank you very much i think i'm very happy
42:54in the sense that
42:55this whole debate about the gdp and the national growth and all is now a very common man subject a
43:07lot of
43:07people are discussing this in all cities everywhere and so that's a good economic sort of literacy the
43:16financial literacy i think that that that from that point of view i'm very happy that i am an instrumental
43:22person for triggering that debate in the country so from that point i have no interest being in being
43:28famous or known or star or whatever that's not my interest or intention now to come to your other remark
43:37that based on your interviews with many other am i sort of prepared to save me kalpa or anything i
43:45think
43:46that's not at all the case in fact the nub of the debate in this country is what is captured
43:56by
43:56the comparison which i brought out from the two government data relating to same period relating
44:07to same current prices gdp or the nominal gdp it's not apple or oranges it's same either you treat as
44:16apple
44:17or you treat oranges it is the same comparing comparing two figures from two series is methodologically
44:24an inappropriate do you agree with that that's what that that you were conceptually wrong absolutely
44:31no absolutely wrong wrong is the argument that this is being compared under two different series
44:40it's the same data for the current price nominal gdp of the same quarter it cannot it should not in
44:49the
44:49normal circumstances be different and here the difference is so large as like six lakh crores in fact this is
44:58the train which will lead to the pattern of the gdp being raised and then being downgraded and that pattern
45:09actually starts from 22 23 by 20 in both 22 23 and in 23 24 the gdp was artificially inflated
45:21aggregating to about 12 lakh crores and then subsequently in the new series that gdp has now been reduced by
45:3012
45:30lakh crores so it's a it's the the 6 lakh crores in this quarter uh and 5 lakh crores in
45:37the next quarter
45:38total about 12 lakh crores is what the missing gdp is in this country and i think the country needs
45:47an
45:48explanation that so the explanation so the explanation you're calling for still is how did how did under the
45:56new see correct me if i'm wrong under the new series how did 86 lakh crores in the first quarter
46:01of last
46:02year go down to 80 lakh crores explain the downward revision because critics critics will say this has
46:08happened in the past also in the past also when a new series has been introduced even when the upa
46:13years
46:13numbers have been revised that's part it happens all over the world what's exceptional here
46:19that's what is exceptional i'll explain to you so uh it's as i said the the the whole thing started
46:28in
46:2822 23 two years we increased it then you've reduced it by 12 12 lakh crores and what is exceptional
46:35in this and
46:36now business standard carried today the data about the last two revisions whenever the revision takes place
46:44in more often than not the the gdp in current prices go up because you are able to capture more
46:53sectors
46:54which were not there you have used better methods you have got better indices etc and therefore the gdp goes
47:02up which is what is reflected in 2004-5 revision which is which was made for 2001-2 the gdp
47:11went up by about
47:12six percent in the next revision which was done relating to 2011-12 the gdp did not change much there
47:21was some up and there was almost flat and almost flat and this is the only revision where the exceptionally
47:30high downgrading or reduction of gdp of 12 lakh crores has taken place and therefore it is unusual
47:38exceptional revisions happen it's a part of the statistical system revision happens for the same
47:46year gdp in four four cycles but that's normal but once the gdp in current prices is fixed after the
47:54four
47:54cycles in this new series it doesn't change the gdp of 51 52 in current prices today after 75 years
48:05is the
48:06same despite six revisions having taken place so gdp in current prices should not take take place
48:13in any revision or every revision now i think this yeah go ahead no so you seem to suggest
48:19that there is a manipulation in bringing it from 86 lakh crores to 80 lakh crores thereby you're casting a
48:24doubt on the ministry of statistics and planning implementation ironically headed by your namesake
48:31soraabh garg are you saying they deliberately brought it down from 86 lakh crores to 80 lakh crores
48:36under the new series to make this year's numbers look good that's been your fundamental question you
48:42still maintain that so this are you accusing them of deliberately doing it i will bring this but first
48:49let me state the facts in 22 in 23 24 the gdp of 357 lakh crore for the year as
49:00a whole was reduced to
49:01i think 345 lakh crores by 12 lakh crores it's i think an honest job which has been done by
49:09the current
49:10administration in the g in the most p to reduce it by 12 lakh crores but the question is why
49:17did the why did
49:18it go by go up by 12 lakh crores that is where the rub lies was there a deliberate intent
49:26to show the
49:28gdp growth of 23 24 and 22 22 3 higher than what it was and that job was done by
49:39showing that gdp growth
49:40at a higher level once that job was done then you reduce it which help you in showing the future
49:47years
49:48growth higher so it's a double advantage first you take advantage by artificially inflating the gdp
49:54and then you reduce it by for for allowing the future growth of the gdp gdp to be higher now
50:02this
50:02pattern i think is very interesting because it it it may really be and that's what i would like it
50:09to be
50:09investigated that this narrative of being the highest growing economy being sold for the last
50:18three four years is being built by this data manipulation of raising it first and then bringing
50:25it down you know in a sense you're making a very serious charge whether you like it or not that
50:30you're
50:31without using the word manipulation you are effectively suggesting it's manipulated and it is
50:35being done under political watch but i want to ask you this therefore in conclusion many are saying
50:40this is subhash ghar's kunnas your vendetta because you were unceremoniously moved out of the finance
50:48ministry under nirmala sitaraman you went sent to power you took vrs this is your revenge you are not
50:53objective you are a political player you're not looking at the numbers you're looking at politics a final word
50:58see i have nothing to do with politics i i have no no interest in politics and i have in
51:08a way taken a
51:09vow never to join politics on any side so don't attribute any political thing secondly i have no sort of
51:19grudge against the government i retired i took voluntary retirement under very amicable circumstances
51:27with voluntary with discussion with the government because i didn't want to serve in a department
51:33which is a sectoral department i felt so i'm running out of time it will be great to go outside
51:40and
51:41therefore i had very amicable discussions even with the prime minister i did present to him after my
51:49transfer etc and my uh sort of application for the voluntary retirement that how do we do together
51:55the the fire the 10 trillion dream i presented that that's in the book don't just believe this that i
52:03have any grudge or any goodness or anything i have absolutely nothing i remain right absolutely on policy
52:11okay i'm going to leave it there we will wait and see uh uh uh mr garden where this debate
52:18that you've
52:18triggered off goes hopefully it will lead to a transparency of data above all else appreciate you joining us it's
52:27time now for my take at the end of this big debate on gdp numbers
52:35okay so what is my take at this end of this long week where we've discussed perhaps gdp numbers quite
52:41like never before after days of debate over the gdp numbers let's not reduce this to a government
52:49versus critics shouting match which is why on the news today our aim over these days has been to bring
52:55credible voices and varied opinion to get a better understanding of a complex issue the 7.8 growth
53:03rate may well be statistically defensible revisions are also a normal part of economic data and any
53:10attempt to improve the quality of data should be supported but when respected former officials and
53:16economists also question methodology or scale of revisions the answer cannot simply be to dismiss them
53:22or engage in name calling the government and statistical authorities must instead go the extra
53:28mind explain in detail the methodology assumptions and revisions with complete transparency even before
53:36the headline numbers are put out and a controversy breaks gdp my friends is not just about growth it is
53:44about credibility and once citizens stop believing the numbers they can start stop they stop believing the
53:52institutions that produce them in a democracy trust is a far more dangerous deficit than a fiscal
54:00one this debate is above all else about trust measured not just in putting out numbers but in ensuring
54:08those numbers are matched by credible and verifiable data remember gdp can go up and down as can governments
54:16numbers numbers numbers can be revised but if trust goes down democracy pays the price think about it
54:25on that note just about time to leave you with my image of the day this is jan master me
54:32celebrations
54:32wishing each and every one of you are happy jan master me and if you are in mumbai my city
54:38remember
54:38tomorrow dahi handi celebrate it well stay safe wishing again each and every one of you and your families a
54:46happy
54:46jan master me good bye jayhin namaskar
54:51jan master me good bye jayhin namaskar
55:02janji
55:02janji
55:03janji
55:03janji
55:03janji
55:03janji
55:04janji
55:04janji
55:04janji
55:04janji
55:04janji
55:05janji
55:05janji
55:05janji
55:06janji
55:07janji
55:08janji
55:11janji
55:11janji
55:20janji
55:25janji