Former IMF Executive Director for India, Surjit Bhalla, has rejected to make the country’s growth rate look stronger, saying there is “absolutely no politics” behind the downward revisions and “no evidence” that the data was exaggerated.
Speaking to India Today’s Rajdeep Sardesai during a , Bhalla said questions over the accuracy of government data were legitimate in a democracy. But after examining whether the revisions had artificially boosted the growth rate, he said he had found no evidence to support the allegation.
“I come out squarely that there is no evidence to date that we have played politics with the numbers,” Bhalla said.
Bhalla was asked about criticism of the GDP figures, including the claim that first-quarter GDP had been revised multiple times, from around Rs 86 lakh crore to Rs 80 lakh crore. Critics have argued that the downward revision has helped the government arrive at a 7.8% growth figure.
Bhalla, however, said the question needed to be examined through the underlying components of the national accounts rather than simply the headline growth rate.
Bhalla said he had specifically looked at whether the revised data showed signs of an attempt to artificially raise GDP.
“If we wanted to boost up the GDP, why would anybody, any government, not boost up consumption?” he asked.
He argued that consumption is difficult to measure, making it one area where a government seeking to inflate growth could theoretically try to push the numbers higher.
But, according to Bhalla, the revised figures do the opposite.
“We have got consumption at a lower rate than what was there in the old data,” he said.
For Bhalla, that weakens the argument that the revisions were designed to artificially lift the headline growth rate.
Bhalla’s second argument centred on investment.
He pointed to what he described as a substantial body of private-sector data documenting a large increase in investment. Such data, he said, provides independent evidence for the rise in investment reflected in the GDP numbers.
“There’s a lot of corresponding data on why investment has gone up,” Bhalla said, referring to agencies and other private-sector sources that have documented the increase.
“And investment adds to GDP,” he added.
His point was that the GDP revision should not be viewed in isolation when other indicators are also showing stronger investment activity.
Bhalla then turned to imports, another component he said needed to be considered while assessing the revised GDP figures.
“Look at what’s happened to imports and import prices,” he said.
Imports act as a drag on GDP calculations, Bhalla explained. At the same time, changes in import prices can affect the implied GDP, particularly in sectors such as manufacturing where imported inputs play a significant role.
“If import prices go up, then the implied GDP, let’s say in manufacturing where a lot of imports come in, are boosted up because import prices have gone up,” he said.
Bhalla’s broader argument was that the movement in the headline GDP number has to be understood alongside changes in consumption, investment, imports and prices.
Bhalla also took aim at what he described as a uniquely Indian debate over rebasing and revisions.
“I think, as I also tweeted under the hashtag only in India, only in India would you have the debate that the base year has changed,” he said.
He argued that India’s economy has been changing rapidly and that revisions are necessary when the structure of the economy changes in a “very dynamic fashion”.
Bhalla also defended the country’s statistical establishment, saying the economists and statisticians who construct India’s national accounts are among the most conservative he has encountered.
But he stressed that his defence was based not simply on his confidence in the statisticians, but on his examination of the data itself.
“The Indian national accounts, the people who put out the national accounts in India, who constructed, are some of the most conservative economists and statisticians that I’ve met,” he said.
Bhalla acknowledged that scrutiny of government data was entirely valid.
“It’s a legitimate, we have a democracy, and we question government. So absolutely, absolutely legitimate point that people are raising, are the data accurate?” he said.
He said he had made a “solid attempt” to answer the more serious question of whether the GDP growth rate was being boosted for political reasons.
His conclusion was unequivocal.
“There is no evidence to date that we have played politics with the numbers,” Bhalla said.
He also rejected the suggestion that the data had been exaggerated.
“There is no evidence that the data was in any way exaggerated,” he said.
The comments came amid a wider debate over India’s revised national accounts, including the downward revision of earlier GDP estimates, changes to the base year and whether the new series can be directly compared with the previous one. While Bhalla rejected claims of political manipulation, the discussion also raised questions over the technical reasons behind the revisions and how India’s changing economic structure is captured in the GDP series.