Government corrects GDP error

The government has said that it has corrected the first-quarter economic growth rate number, which it measured based on market transactions, less than 32 hours after it put out an erroneous figure, which came close to damaging the credibility of its statistics and the India growth story.

The Central Statistical Organisation (CSO) nearly tripled the initially estimated growth rate on the demand side from 3.7 per cent to 10 per cent in an announcement on Tuesday, following an increase in private consumption, government expenses and investments.

According to the CSO, private consumption was up 3.8 per cent and not 0.3 per cent as reported earlier. The government expenditure figure has been increased to 14.2 per cent from a negative 0.7 per cent earlier and investment, according to the statistics office said, stood at 7.6 per cent, as against 3.7 per cent as originally reported.

The revision goes to buttress the prediction that India may grow at more than 8.5 per cent in the fiscal year.

According to The Economic Times newspaper, the robust 8.8 per cent growth figure in the value of all goods and services produced by India, or the gross domestic product (GDP), was not corroborated by the 'demand side' of the equation, or that calculated on the basis of market transactions.

According to Pronab Sen, former chief statistician of India there was always a discrepancy in the GDP at factor cost and GDP at market price estimates due to the different price deflators used to calculate them. He added that for GDP at factor cost, wholesale price index-based inflation was used as a price deflator while for GDP at market price, the consumer price index-base inflation was used.