Why isn’t Raghuram Rajan not convinced about India’s growth? Here’s what Arvind Panagariya had to say

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16th Finance Commission Chairperson Arvind Panagariya panned theories that India’s surprise surge in economic growth to above 8% last quarter was distorted.

“If this year I fudged the GDP numbers to raise my growth by 2%, I will have to hide the GDP by 2% next year too…at this base, I will have to fudge it by 4% to get my growth numbers tallying,” the former VC of Niti Aayog said at the BT Best Banks Awards. 

“The experts turned out to be wrong in their forecasts by several miles,” Panagariya said. 

A sharp divergence in the growth rates based on GDP and Gross Value Added (GVA) led to some economists saying GDP may have been ‘overstated’. 

It can’t be all tax revenue, he said. “If you are an economist, that borders nonsense, because there is output associated with tax revenues also. The Centre commands control of certain amount of output related to tax revenues.”

To a question why eminent economists such as Raghuram Rajan, Arvind Subramainum have doubts on India’s macros, he said, “If you have to question then you have to pinpoint your source and suggest how to improve it. This methodology (Growth) was not advised by the present government. There was a commission involved, initiated by the previous government of which one of the two economists was a part.” 

Former chief economic adviser Arvind Subramanian on March 15 said India’s latest GDP numbers are ‘absolutely mystifying’ and difficult to comprehend.

Speaking at the India Today Conclave, Subramanian said, “I can’t understand the latest GDP numbers, they are mystifying, and don’t add up. For example, the implied inflation numbers given by the government are between 1-1.5%, but the actual inflation is around 3-5%.”

Panagariya said such criticism is because of this culture which is ‘velcro for negative news and teflon for positive news’. 

“Some people have recognised this and made it a business to stay in limelight.”



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