Setting aside the recent controversy over India’s growth data, chief economic advisor,
Krishnamurthy Subramanian reaffirmed that the Indian economy was growing at a “very high rate”.
Delivering the keynote address at a CII Conclave in Chennai,
Subramanian said, “The Indian economy has grown at a very high rate, and despite any controversy that you must have read in the newspapers, let me validate that in the three months that I’ve spent (as CEA), one of the things that I’ve realised is that the touch-points of policy, in India, are large.”
Subramanian added, “Therefore it is very hard to create a narrative that is different from the truth.”
The CEA was presumably responding to doubts raised by former Reserve Bank of India (RBI) governor Raghuram Rajan over the credibility Gross Domestic Product (GDP) data, in an exclusive chat with CNBC-TV18 a few days ago.
Rajan had questioned the dissonance between growth data and job-creation, calling for the government’s growth data to be looked at by an independent committee.
There have, for long, been questions raised over the methods employed to calculate GDP. A few weeks ago, 108 economists had signed an open letter claiming that key statistics and data in India had “come under a cloud for being influenced and indeed even controlled by political considerations”.
Subramanian, however, was stoic in his defence. “The fact remains that we have recorded very high levels of growth,” said Subramanian, “In fact, the average rate of growth is the highest for any government since Liberalization.”
Subramanian pointed out that 7.5 percent growth in trying global economic conditions, was a testament to the nation’s resilience.
‘Growth Despite Global Headwinds’
“First of all, the headwinds against globalisation have dampened our exports. Then, in 2015 and later, credit growth — especially for small and medium firms — was in a bad shape,” he said, “Despite the headwinds against globalization and the fact that credit growth has been quite tepid during this period, we have achieved an average growth of 7.5 percent.”
Crediting domestic consumption for resilient growth rates, the CEA added that high domestic consumption could “make us more immune to some of the shocks we may experience, globally”.Subramanian added that high domestic consumption was possible thanks to falling inflation. “Between 2014 and 2015, inflation rates were in excess of 10 percent,” he said, “Over the last five years, the average rates of inflation have been about 4.5 percent.”