Former Finance Secretary Subhash Chandra Garg and Professor Dr Gaurav Vallabh, a member of the Economic Advisory Council to the Prime Minister, went head-to-head over India’s latest GDP figures in an India Today TV‘s show hosted by Marya Shakil, with Garg questioning the scale of revisions in the new GDP series and Vallabh defending them as a result of changes in economic coverage and methodology.
Garg, who has faced criticism for calculating nominal GDP growth at 2.5% using the earlier figure for the previous year’s first-quarter GDP, said the central issue was not the deflator or the change in the base year, but how the government’s current-price GDP figure had fallen from Rs 86 lakh crore to Rs 80 lakh crore.
“If it brings down from 86 lakh crores to 80 lakh crores… it owes an explanation,” Garg said, arguing that such a large revision required scrutiny.
He said the revision represented a reduction of around Rs 6 lakh crore, and pointed to what he described as an even larger revision in the previous years.
According to Garg, the current-price GDP for 2023-24 had been revised upward by around Rs 6-6.5 lakh crore in the latest revision. He argued that such changes were significant enough to warrant a detailed explanation from the government.
“This kind of unprecedented revision I haven’t seen in my life at all,” Garg said.
He challenged Vallabh and the government to examine historical data to establish whether current-price GDP had ever been revised by such a large percentage.
Vallabh rejected Garg’s interpretation, saying the change in GDP estimates after a base-year revision was not limited to changes in prices.
He said the revised methodology incorporated new surveys, GST records, better company data, government records and changes in the coverage of economic activity.
Vallabh illustrated his argument with an example of factories being added or removed from the calculation as the data and coverage of economic activity changed.
His central argument was that the Rs 86 lakh crore and Rs 80 lakh crore figures could not simply be treated as directly comparable because they emerged from different statistical frameworks.
“Because with the change in base year, there is a difference in the coverage of economic activity,” Vallabh said. He also argued that GDP estimates undergo several rounds of revisions before reaching final figures, making it premature to draw definitive conclusions from the first estimate.
Garg said Vallabh’s explanation did not address his specific concern because he was discussing current-price GDP, rather than the subsequent calculation of real GDP using a deflator.
“There is no question of denominator and numerator here in the current prices,” Garg said.
He maintained that his 2.6% calculation was based on the government’s earlier current-price GDP figure and did not involve changing the inflation or deflator assumptions used in the official calculation.
Vallabh, however, said Garg’s calculation effectively assumed that the coverage of economic activity had remained unchanged despite the change in the base year.
He said arriving at a growth rate of 2.6% or suggesting zero real growth without accounting for the methodological changes amounted to an incorrect interpretation of the data.
The discussion also moved to employment, with Vallabh citing official data to argue that the economy was showing signs of strength. He pointed to 7.1% growth in private consumption, 11.9% growth in gross fixed capital formation and 12% growth in real exports, as well as a reported decline in unemployment.
Garg, however, argued that the employment data needed deeper examination. He said much of the increase in employment was concentrated in unpaid work in family enterprises and agricultural employment, which he argued did not necessarily represent the creation of quality jobs.
Garg also raised concerns over unemployment among educated young people and those outside the labour force.
“There is glass full, half full, and there is glass half empty as well,” Garg said, adding that he viewed the employment situation as neither completely positive nor completely negative.
Vallabh acknowledged that improving the quality of jobs remained a challenge but argued that the broader economic indicators pointed to continued growth.
The debate ultimately remained centred on one question: whether the large revision in the GDP base figures is a normal consequence of improved data and methodology, or whether its scale warrants greater explanation and scrutiny.