Pronab Sen, the primary chief statistician of India, in a telephonic dialog with Asit Ranjan Mishra, explains his key concern in regards to the newest gross home product (GDP) information and the criticism he doesn’t subscribe to. Edited excerpts:
How do you see the 7.8 per cent GDP progress within the first quarter (April-June/Q1) of 2026-27? Does it go the scent take a look at?
It’s troublesome to say whether or not it passes the scent take a look at as a result of what we now have seen is massive downward revisions within the latest previous. Bear in mind, the primary estimate we get for quarterly GDP relies on very, very weak information. So, one can solely go by latest historical past, and up to date historical past has seen pretty substantial downward revisions. So, I’m a bit of shaky about it as a result of I’ve questions in regards to the information. My private speculation is that this 10 per cent nominal progress they’ve obtained might be proper. My query is basically in regards to the value deflators, which decide actual GDP progress.
The Q1 GDP numbers have additionally develop into essentially the most contested in latest instances. How do you see the controversy that has erupted surrounding them?
I don’t know what all of the criticism is. The one criticism I’ve learn is by (former finance secretary) Subhash Chandra Garg.
So, what do you consider his criticism?
I don’t fairly agree. The conference has all the time been to check the newest estimate with the newest revised estimate.
Garg can be questioning the sharp downward revision of Q1 of 2025-26 nominal GDP beneath the brand new base yr?
There could be a number of causes for it. While you do the bottom revision, you make corrections for all of the overstatements you made beforehand. Now, often, these haven’t been very massive. This time, the revision has been massive, 7-8 per cent. And the principal purpose for it, I believe, is overestimation of GDP prior to now. So, they’ve simply corrected that.
So, what’s the actual situation with the brand new GDP collection?
I’m questioning the methodology within the new GDP collection. Primarily, the adjustments they’ve made are all legit, fascinating, and recognized earlier as effectively. The explanation we didn’t do it’s that we did not have the information.
There are a few issues, and so they all need to do with costs and value indices. What they’ve carried out this time round is double deflation, which is an efficient factor to do. However the level is, it’s far more data-demanding. I don’t know whether or not they have that information. If you find yourself doing single deflation, you want information solely on the value of the ultimate items.
Now, you want costs not just for the ultimate items, however for all inputs, which is a a lot bigger variety of items. I’ve not seen any proof that they’ve that information.
The Ministry of Statistics and Programme Implementation (Mospi) has used the Output Producer Worth Index (PPI) in double deflation. However for the enter deflator, we have no idea whether or not enter PPI has been used as a result of it’s at an experimental stage.
I don’t know what they’ve carried out. That is my drawback as a result of if you’re to do the enter facet, you want enter costs. Have they collected them? Have they used them? In that case, why have they not been made public? So, my drawback is basically with the information.
Mospi has stated the “sources and strategies” will likely be launched inside two weeks.
Bear in mind, the brand new base estimates have been launched final yr. It ought to have already been launched in order that we all know what was happening.
What are your different issues?
The second is PPI. We had not been in a position to calculate the PPI for greater than twenty years as a result of producers didn’t give us the costs. They stated that it is a commerce secret. PPI you may solely get from the producer. You’ll be able to’t get it from anyone else, whereas the wholesale value index (WPI) is a market value, which you’ll be able to go and take quotations. You’ll be able to’t try this with PPI. The producer has to present it to you.
And very often, there isn’t a one value as a result of a producer could promote to a big distributor at one value and to a small distributor at a distinct value. So, he has to provide the common. I don’t know whether or not they’ve been in a position to acquire this information. And if they’ve, I don’t understand how they’ve carried out it except Indian firms have develop into very cooperative.
Do you suppose Mospi ought to have waited for the PPI collection to mature earlier than adopting it as a deflator?
The nice follow is that whenever you’re introducing a very new dataset, it is best to run the 2 datasets in parallel. Make the estimates on the idea of the 2 units individually and current them to the general public. So, you may see what the variations are. However to say, I’m discontinuing this (WPI) and beginning this (PPI) abruptly with none additional info, what you’re saying, in impact, is, “Belief me”. However belief is just constructed when you may examine. Now, I can’t examine as a result of I’ve no overlapping collection.
One other contentious situation has been the 9.2 per cent actual manufacturing progress, the place the deflator has develop into adverse (-1.5 per cent). Is that this regular whereas utilizing double deflation or an aberration?
It will probably occur with double deflation. With single deflation, it might’t occur.
Mospi has stated that there isn’t a purpose for the GDP deflator to trace the Shopper Worth Index (CPI) or WPI as a result of their protection is completely different. Do you agree? Questions have been raised in regards to the 2.5 per cent deflator in 1 / 4 when WPI was near double digits.
It does look suspicious. That is my drawback as a result of there are too many issues taking place. You’re switching from WPI to PPI. You might be doing double deflation.
Within the UK or Australia, detailed supply-use and nationwide accounts information permit researchers to reconstruct a lot of the GDP calculation. Why is it not carried out in India?
As a result of they do not launch the uncooked information.
So, are you saying that must be launched?
Sure. At a sure stage of aggregation, after all. You’ll be able to’t launch the information on the unit stage as a result of there are confidentiality issues.
However why was it not carried out even throughout your time at Mospi?
We have now by no means been in that behavior. It’s a matter of behavior. However at the moment, issues have been easy sufficient. The CPI information was launched within the full breakdown. The complete information set is offered for WPI.
Inform me just a few issues that you simply wish to see that may offer you extra confidence within the numbers which were launched.
What I wish to see is principally how they’ve calculated GDP. How they’ve obtained the information for the PPI. If you happen to’ve obtained it, please launch it for a size of time in order that we will test its stability.
Secondly, what on earth have you ever carried out with double deflation? The place is your enter information? You’ve got given me no indication of that. To do this correctly, you would wish a large Provide and Use Desk (SUT). The place is that? They discontinued the SUT, the truth is. It was being produced and so they stopped it.
Not solely ought to they not have stopped, however they need to have truly expanded it. And clearly, we must always present extra information in order that researchers can reconstruct the index. That’s higher for transparency functions.
