Indian Press Trust posted on 10th that the economic data published by Indian Central Statistics Agency showed that the Indian economic growth is expected to reach 7.4% in Fiscal year 2014/15 by the adjusted computing method, having the potential to proceed the economic developing level of China. Nonetheless, there is specialist pointing out that the new computing method has low reliability, inequivalent to the actual economic condition showing by other economic indicators. The new data is “inflated”.
Indian Statistics department adjusted the GDP calculation, computing on the basis of market price instead of the primary cost price, and change the base-year from the original fiscal year 2004/05 to 2011/12. The result of new computing method presented very promising economic condition: the economic growth rate of fiscal year 2013/14 reached 6.9%, greatly exceeded 4.7% which was published before; the economic growth rate of last October to December was 7.5% which exceeded China’s 7.3% in the same period of time; the statistics department predicted the economic growth rate for fiscal year 2014/15 (India fiscal year starts from April 1st to March 31st of the next year) would be 7.4%, reaching the China’s economic growth rate in 2014. Before, India central bank predicted the economic growth rate for fiscal year 2014/15 would only be 5.5%.
Indian statistics department claimed that the new computing method could better conform to international practice, and could better conduce to analyze actual national economic condition. The Wall Street Journal of America stated, if the Economic data of India has truly exceeded China, it would account for the return of India and stabilized the political basis of Modi’s government. Last month, the World Bank predicted that India would surpass China in two years and become the country with fastest economic growth rate in the world.
Nevertheless, Indian First Post posted on 10th saying that the sudden risen economic growth rate puzzled Indian economists. The chief economist of an Indian rating agency Jothy stated that he was still studying the data trying to understand comprehensively. Indian Central Bank also claimed to be studying the statistical method and refused to comment on the newly published data. The chief economic consultant of Indian government, Subramanian said honestly that the new computing method was confusing, and alerted Indian government to be cautious when making economic policies based on the adjusted data. Associated from Indian business committee expressed to Indian Press Trust that, Indian economic condition is not as optimistic as the data showed, investment has not been revived; even though oil price is decreasing, consumer’s demand has not been brought up.
Foreign media and specialist also are suspicious of the Indian economic data. Reuters claimed that everyone thought that the data would show the continuing struggle of Indian economics after Modi in charge before it was released. Last May, before Modi took power, the Growth rate of Indian economics was at its slowest point since mid-80s of last century. Some economist pointed out that the recent released data doesn’t conform to other economic indicators; indicators like industrial production, commerce, and tax revenue all showed weak economic condition. In professor of Cornell University, formal Asian economist of International Monetary Fund, Prasad’s consideration, the new data couldn’t even make a sand, it is not in line with the actual economic situation that was happening. Especially the Federal Reserve tightened its monetary policy has caused volatility of emerging market, Indian central bank had to carry out emergency intervention due to this situation.
International Studies Institute of Fudan University Professor Song Guoyou, who is also an expert on economics, told reporter of Global Times on the 10th that the new GDP computing method is unable to truly reflect the change of Indian commodity price in recent years, thus the resulting economic data is questionable. Commodity price is an important variable in calculating GDP； the international convention in calculating method uses commodity price from the past ten years to find average commodity price. India uses 2011/12 instead of 2004/05 as basis year shortened the time length of data from 10 to 3 years, which made it very hard for the result to reflect on inflation of Indian economics.
Indian economist Mahan Barr believes that the new computing method would also affect economic data for the past few years. Among the 10 years before 21th century, economic growth rate of better years may achieve 10% or 11% instead of the primary published 9% with adjusted data, which will change people’s analysis on growth potential and business cycle. An analyst pointed out that India has great enthusiasm for rising economic growth rate, had been focusing on the public opinion of surpass Chinese economic growth rate in 2016. At the same time, Modi’s government was injecting optimism to let populace believe the deep structural barrier to economic growth is gradually removed. Comparing economic level between India and China, director of Indian central statistic agency, Ashish Kumar admitted that the economic scale of China is 4 to 5 times as much as India’s, even if India kept growth rate of 7%, it would take 20 to 30 years for it to catch up with China.
The one person worries most about the statistic confusion caused by newly published Indian economic growth rate must be Indian minister of finance. Reuters states that Indian financial department is planning on submiting government budget early on Feb 28th. The original budget plan includes increase in capital expenditure, reduce tax for poorly performed manufacture industry. But after the publish of new data, it is hard to estimate the scale of fiscal incentive needed for recovering economic vitality.