Did the economy grow faster under the last United Progressive Alliance-II government under Manmohan Singh than the current Narendra Modi government?
The back series data on GDP has been prepared by the committee on real sector statistics and was presented late last week. It basically gave the back series of gross domestic product (GDP) figures as per the new base year i.e. 2010-2011.
According to this report, the average growth rate during UPA-I, 2003-2008, was 8.4 percent and the average growth during UPA-II i.e. 2009-2014 was 7.7 percent.
Compared to this, the current National Democratic Alliance (NDA) government under which the average growth rate is 7.3 percent definitely looks weak. The government has called this report "experimental" and "non-official."
However, what this data also shows is that high growth under UPA-II government came at the cost of high fiscal deficit. Currently, the average fiscal deficit under the four years of the NDA government is at 3.7 percent, under the UPA-II, the average fiscal deficit was 5.3 percent.
Sudipto Mundle, Emeritus Professor at The National Institute of Public Policy and Finance and the Chairman of the Committee on Real Sector Statistics, said, "In principle not just in India, but all over the world, there was monetary easing as well as fiscal stimulus in order to get the global economy out of the worst recession. It was not an India specific thing to do this fiscal stimulus or monetary easing. However, that being said, in the case of each country, it had to be calibrated based on very specific situation and India bounced back fairly quickly, as did China compared to a number of other advanced economies and other emerging market economies."
“I think our potential growth is around 7 percent plus, maybe 7.1 percent or something. So a policy which aims to target that, to get there, would be the appropriate policy," Mundle said to CNBC-TV18.
Soumya Kanti Ghosh, group chief economic advisor at SBI, said, "The new series which has been put out and the old GDP series which was already there in public domain, if you compare the gap between them for a period of 18 years, the gap is only 7 basis points. So from that point of view, the new GDP data which has been put out largely confirms with the trend of the old GDP data."
“Coming to a specific point of whether a 10 percent growth is sustainable or not, clearly if I look into the data in 2005-2006, 2006-2007 and 2009-2010, the global growth average was 5.5 percent. Against this backdrop, Indian economy notched up a 10 percent growth rate in 2007-2008 and then again in 2010-2011 but that was entirely on the back of a fiscal stimulus because the growth had collapsed to 4.2 percent and then recovered."
"The important thing is the data is significantly volatile on either direction. On some, it is declining by 600 basis point and then is jumping by 700 basis points. So it means that there are some external factors, which is at play and we are trying to balance that external factors to some sort of stimulus. If that pushes up the growth to beyond 9-10 percent with a nominal GDP growth of 21 percent, I think that is clearly sustainable for a country like India," Ghosh said to CNBC-TV18.