Murli Manohar Joshi, Chairman of the Parliamentary Committee on Estimates, has dropped a bombshell against his own government.
He, in a draft report, recommended that the government review the mechanism evolved for GDP estimation. The report also prompted BJP members in the committee to vociferously oppose the recommendations and block the report’s adoption at Thursday’s meeting, as reported by Economic Times.
They argued the report could dent the credibility of Indian economy’s growth and GDP projection in the eyes of the IMF, World Bank and international rating agencies, sources said.
The draft report also questioned accuracy of the data, survey and parameters adopted to measure employment and unemployment levels, and complained that up-to-date, realistic position on employment/unemployment at a particular time “on various important parameters is not available”.
New appointed IMF Chief, Gita Gopinath had earlier said,
“What needs to be done generally for policy in India is just better data. It’s not great when everybody, everywhere, seems to be suspicious of the GDP numbers. For instance, I am working on a paper that is trying to basically answer the question: What was the impact of demonetisation in the economy? And the data hurdles are immense, in terms of what kind of data you have to measure things. Different parts of India were affected differently by the cash crunch. So, for instance, at the minimum, suppose you have a state GDP per capita, and you would want it at a quarterly frequency, which doesn’t exist. It’s just basic stuff that doesn’t exist.”
In the draft report, Measuring Growth, Employment & Income, chairman Joshi is also learnt to have recommended that the government evolve a mechanism by bringing new measures for GDP estimation by including statistical data of larger social factors and realtime data. This triggered further opposition from Nishikant Dubey-led BJP MPs, who command a majority in the committee.
As they threatened a dissent note, the chairman and some other members such as Mohd Salim are learnt to have pointed out to them the rules of the estimates committee don’t permit such a course, reported Economic Times. With BJP MP persisting with their opposition, sources said, the chairman asked the critics to give written suggestion for alteration/modification “within a week”.
What Does The Draft Report Say?
The draft report has said that in the present GDP estimation, as stated by the Department of Economic Affairs, “only” economic variable are used to analyse the economy. Also, it felt the base data was not real-time, sources said. Instead, the draft report — based on larger evidences provided by various government departments and witnesses before the committee — felt as GDP is an indicator of economic and social development of the country, it had to include other parameters, alternate methods and metrology for measuring it to “capture realtime happenings” — such as number of schools, hospitals and doctors and other professional produced — given India’s large population, diverse geography, creativity of society, art, spiritualism, climate condition, working conditions of workers, including leisure time, etc to make GDP estimation reflect “reality and public perception”. BJP MPs countered it by saying the Niti Ayog and Ministry of Statistics had provided data on all these fronts for GST estimation.
The draft report, sources said, concluded that the mechanism evolved for GDP estimation needs review and that many more factors need to be incorporated in statistical measurement of socio-economic factors so that GDP reflects reality and perception. BJP MPs now plan to amend the draft report through alternate “wordings and formulations.” Incidentally, BJP MPs had earlier blocked adoption of Standing Committee on Finance’s draft report on demonetisation.
This is the third report of a standing committee to be held due to protest for BJP members. Standing Committee on Finance headed by Congress leader Veerappa Moily is yet to bring out its report on demonetisation even after working on it for last two years.
With inputs from Economic Times