Tag: Arvind Subramanian

GST Council to consider broadening tax base, additional resource mobilisation and improved tax compliance

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

As Goods and Services Tax (GST) collections slip and the states are not getting their compensation dues, the upcoming council meeting on December 18 is likely to have a heated discussion on reasons and measures needed to augment revenues.

According to the GST Council agenda accessed by CNBC-TV18, the council will take detailed cognizance of falling GST revenues. The council agenda notes that “there is a widening gap between the projected revenue collection and the fund requirement which calls for immediate measures for revenue augmentation.”

GST Council will also be given a detailed analysis of the reason behind the current decline in revenue collections. The GST Council comprises of union finance minister as the chairman and minister of state finance as vice chairman of the council. All the states and union territory finance ministers are members of the GST Council.

Also read: GST rates to increase for various items as council set to meet on December 18

The reasons that have been cited in the agenda includes a backdrop of entire rate-setting exercise undertaken by the council at the time of roll of GST. Agenda says that since the introduction of GST, several rate revision and rationalisation exercises have been done and several other factors such as the increase in the threshold limit for exemption and changes in composition scheme have impacted GST revenue. The agenda also gives a backdrop saying that frequent rate rationalisation leads to deviation from pre-GST tax incidence (including cascading).

It also notes that the current GST rates are a deviation from initial estimated revenue-neutral rate (RNR) 15 percent and 15.5 percent (Centre and states combined) suggested by former chief economic advisor, Arvind Subramanian and the RNR deviation distorted the then “assumptions that on introduction of GST, the Indian tax administration collection efficiency would move up.”

According to the GST Council Secretariat, “Broadening of the tax base, additional resource mobilisation and improved tax compliance will help achieve the desired outcome of revenue augmentation.”

Also read: Govt preparing blueprint to better GST collections before next council meet, says Ajay Bhushan Pandey

Not just the reasons, some of the steps already taken by the Centre to augment revenue collections are also noted by the council. These include setting up of a Committee of Officers with terms of reference such as “inter-alia, suggestions of measures for expansion of tax base. States were also requested to provide specific suggestions on GST and compensation cess rates to be levied on various items, review of current exemptions, rate calibration for addressing inverted duty structure, the introduction of compliance measures other than those already in existence and any other measures for revenue augmentation.”

This Committee of Officers has met two times so far and has taken into consideration the suggestions received from the states. CNBC-TV18 on December 10 reported that the Committee of Officers has streamlined various suggestions given by states and will give a detailed presentation on the revenue scenarios and policy options to the GST Council on December 18.

Many state officers and stakeholders have pitched for rate rationalisation saying that the government can consider bringing down the 4-slab structure of GST to 3 rates, by increasing the 5 percent slab to 8 percent or above and merging the 12 percent with 18 percent slab and keeping the 28 percent slab as is.

Also read: Nirmala Sitharaman says income tax rate cut under consideration

Not just this, some states have also pitched for “increasing the cess rate on sin goods, which according to sources can yield close to Rs 2,000 crore more in the compensation cess kitty to meet the requirements of states,” sources added.

Some states have called for the measures of rate rationalisation and hiking of cess rate as a combination along with exploring a possibility of adding some services also under the cess category, to deal with the current situation of poor revenues, sources had told CNBC-TV18 on December 10.

According to the data, the government needs close to Rs 14,000 crore every month to meet the compensation requirements of states, which can be done only through the compensation cess kitty, but on an average government is able to collect only Rs 7,000-8,000 crore every month.

This monthly requirement, of late, has increased to Rs 17,000 crore per month, in the wake of falling GST collections and if, the economy continues to grow at the current pace, then as per the current GST rates, this requirement will get increased to Rs 21,000-22,000 crore per month, sources quoted the data analysis shared to the GST Council.

Apart from revenue augmentation exercise, the council is to deliberate on issues like GST on lottery and proposal for the creation of the Public Grievance Redressal Committee.

Also, the council would review GST E-Way Bill System – FASTag Integration, new return system, integrated refund system with disbursal by the single authority, generation of electronic invoice reference number and linking of GST registration with Aadhaar and proposed changes in the GST law and GSTN system.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Chidambaram resumes writing weekly newspaper column; slams govt on GDP data, state of economy

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Former finance minister P Chidambaram has resumed writing his weekly column for the Indian Express after the Supreme Court on Thursday granted him relief in his plea seeking bail in the INX Media money laundering case. The apex court set aside an order by the Delhi High Court order that prevented him from walking out of jail.

Chidambaram was arrested by the Central Bureau of Investigation on August 21 and the Enforcement Directorate on October 17. He spent 105 days in the custody of the CBI and the ED.

Chidambaram, who has served as the finance minister in four separate tenures, has been writing a column for the Indian Express since 2015, but his last column appeared in the paper on August 18, three days before his arrest. After a gap of nearly four months, his latest column was published online on December 8 with the headline “In an economy sans economists, ministers resort to ‘bluff’ and ‘bluster’.”

What he wrote

In his column Chidambaram has given a scathing assessment of the state of the Indian economy.

On GDP data

The second quarter gross domestic product (GDP) growth for FY19-20 has come down to 4.5 percent, according to the latest government data released on November 30. Chidambaram wrote that the GDP growth has been in a consistent decline over the past six quarters, going from 8 percent down to 4.5 percent over the period.

He added that the decisions on the economy are being taken by the Prime Minister’s Office (PMO) and implemented by the finance ministry. “And there is mutual suspicion and a blame game between the mandarins in the two offices.”

On consumption data and onion prices

Chidambaram wrote that data from the National Sample Survey Office (NSSO) shows a decline in consumption, while rural wages and producer prices have also slid; inflation is on the rise; thermal power plants are working at a reduced capacity due to a lack of demand for electricity.

The government is “…struggling to control the price of the humble onion, a staple among the poor and the middle class,” he further wrote.

‘Impending disaster’

Chidamabaram was scathing in his diagnosis of the problems facing Indian economy. He wrote that a host of decisions taken by the ruling dispensation have led to an “impending disaster.” “The fault of the government is its stubborn and mulish defence of indefensible decisions taken in the past — demonetisation, a flawed GST, tax terrorism, regulatory overkill, protectionism and centralisation of decision-making in the PMO,” he wrote.

The Congress veteran went on to add that the government has denied that structural issues in the economy need to be addressed. He berated the government for taking the inputs of “competent economists” to address the problems. “India’s economy is being run without the aid and advice of competent economists. The last one was Dr Arvind Subramanian. Imagine teaching a doctoral programme without a professor or performing a complicated surgery without a doctor! Running an economy without reputed economists — and through incompetent managers — is the same.”

Subramanian served as the chief economic adviser from October 2014 to June 2018 before leaving the role to resume his career in the academia in the United States.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI capital reserve: Is Rs 52,000 crore worth so much fuss?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The three-and-a-half-year-old fight for the Reserve Bank of India’s so-called excess capital has finally ended amicably. The Bimal Jalan panel has recommended a formula for calculating the RBI’s capital reserves, by which the RBI board found the central bank’s reserves to be extra by just Rs 52,637 crore and has accordingly decided to transfer it to the government.  All is well that ends well and one hopes this accursed topic will not be raised for some years now.

Accursed, because the issue, in its wake soured relations between RBI and government for over two years, led to the resignation of one RBI governor and one deputy governor and may have even been partly responsible for the transfer of a finance secretary out of his ministry. Is Rs 52,000 crores worth so much fuss?

The tug-of-war between the government and the RBI began after the economic survey of 2015-16, when chief economic advisor Arvind Subramanian wrote a detailed chapter comparing RBI’s reserves with that of other central banks around the world and complained that RBI’s reserves of around Rs 10 lakh crore are way too high for its balance sheet of around Rs 30 lakh crore. He argued that RBI should take out some Rs 4 lakh crore from its reserves and use it, say, to capitalise public sector banks which will help them lend more and in turn help economic growth.

For those who don’t care about technical issues like RBI’s reserves, here is a backgrounder: The RBI, like companies, makes profits and by law has to transfer the year’s profits to its owner, the government, after providing for contingencies. Over the past 25 years, the RBI had collected a kitty of about Rs 3 lakh crore as its contingency reserves.

Separately, it has revaluation reserves. What are these? The RBI often buys dollars from the market, in times of huge inflows (which can suddenly make the rupee strong and hence make our exports uncompetitive); it buys gold (like all central banks do, so that other countries trust that the RBI has some real assets in a crisis) and it also buys Indian government bonds sometimes to push more rupees into the economy. Now every year, like all banks and companies, RBI accountants compare the current price of these assets versus the price at which they were purchased and the excess, if any, is accounted in a “revaluation” reserve.

In February 2016, when Arvind Subramanian was accusing the RBI of excess reserves in his survey, the RBI’s Rs 10 lakh crore reserve comprised of Rs 3 lakh crore in contingency reserves and Rs 7 lakh crore of revaluation reserves (all numbers are approximate). Former governors of RBI and eminent economists argued against Subramanian saying revaluation reserves are not realized reserves and hence should not be used to say the RBI is over capitalised.

The balance of Rs 3 lakh crore as contingency reserves amounted to about 8 percent of the RBI’s balance sheet and these are needed during financial crises, for lender-of-the-last resort responsibilities, and for use in case of, say, cybersecurity or other operational risks.

The government was not convinced and, in 2018, upped its ante on demanding excess reserves from the RBI. Deputy governor Viral Acharya publicly decried this demand as an attack on the RBI’s autonomy. Many former RBI governors and economists agreed with him while the government did not. It issued directions to the RBI governor under the never-used Section 7 of the RBI demanding to know why RBI should not transfer excess reserves. For these and other reasons, governor Urjit Patel resigned. The image of both RBI and the government took a beating in the national and international markets.

Finally, in a bid to soothe tempers and repair the ravaged reputation, the government appointed a panel headed by former RBI governor Bimal Jalan. The panel also comprised of former RBI deputy governor Rakesh Mohan (vice-chairman of the committee), the RBI’s board directors Bharat Doshi (an acclaimed chartered accountant), Sudhir Mankad (retired IAS officer), serving deputy governor N S Vishwanathan and the then finance secretary S C Garg.

After overcoming some dissent from one member (SC Garg), the Jalan panel submitted a “unanimous” report last week, since Garg had ceased to be both finance secretary and hence a member of the panel.

The Jalan committee rejected the old Subramanian argument that revaluation reserves should be included while calculating a central bank’s balance sheet. As per Jalan panel, at about Rs 3 lakh crore, RBI’s contingency reserves are only 6.8 percent of its balance sheet of about Rs 40 lakh crore. The panel recommended that keeping in mind international standards, it would like the RBI’s contingency reserves to be 5.5-6.5 percent of its balance sheet.

RBI’s research wing CAFRAL had published a research paper earlier this year which found that globally central banks keep an average 6.5 percent as a contingency reserve. Emerging market central banks are found to have an average contingency reserve of 6.86 percent.

The RBI board accepted Jalan panel’s recommendations on Monday and decided that for now 5.5 percent reserves will do. Consequently the excess (6.8% – 5.5% = 1.3% of balance sheet) was considered excess and transferred to the government. This worked out to an amount of Rs 52,637 crores.

The independence of the committee certainly deserves praise. Faced with the slowdown and pressured by election promises, the government would have liked a larger transfer. But the RBI board members and former governors kept their head down, worked out the international standard and stuck to it. Kudos also to the government for accepting that a manna of Rs 4 lakh crore, as promised by the former CEA, not being acceptable to the six wise men in the committee.

In the end, it may have just have been a face-saving formula. The RBI Board didn’t want the government to lose face and hence agreed to accept the lower end of the band recommended by the panel so that at least some money can be transferred. Nor did the panel want RBI’s actual or perceived autonomy to be diminished.

Also, all transfer of dividend from RBI is actually just printing of notes, and printing a large amount of notes (say Rs 4 lakh crore) would have amounted to monetisation of the deficit, would have been inflationary and attracted suspicion and criticism from international markets and rating agencies.

The paltry amount of Rs 52,637 crores satisfied all sides and arguments and has also left the bond and equity markets a trifle happy since the government has a little more money to spend.

As Shakespeare would say, “all’s well that ends well” but in this hour of happiness, it is worth remembering the stout defence of RBI as an institution put up by the former RBI governor and his deputy governor.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Slowdown is worrisome; India needs to put its best minds to implement bold reforms, says Raghuram Rajan

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The slowdown in India’s economy is very worrisome and the government should pay attention to the arguments made by the former chief economist Arvind Subramanian about overestimating growth with the new gross domestic product (GDP) data, said Raghuram Rajan, the former Reserve Bank of India (RBI) governor. Sharing his views on the ongoing economic slowdown and its impact on India, Rajan said the country needs to give a fresh look at the way it computes the GDP as inaccurate data may lead to wrong policy interventions.

Talking to CNBC-TV18, Rajan, who is the Katherine Dusak Miller Distinguished Service Professor of Finance at Chicago Booth, said that in comparison to the 2008 financial crisis, the banks are better levered across the globe.

Edited excerpts from the interview:

There is a lot of fear about the global scenario in India as well. What is the world looking like to you? Is it looking like 2008 again with so much of risk aversion?

History never repeats. So, I think there is more leverage than there was in 2008, but it’s not in the same places. Banks are less levered than they were then. On the other hand, some corporate sectors certainly in the United States are more levered, certainly China is more levered and of course, governments are more levered. So, leverage was a big factor in 2008. It’s different today, not necessarily better, but different.

Second, I think the big issue today is not so much the financial sector frenzy, there is some, but really on trade and global investments and the worries are that if we don’t pay enough attention, the old global order is going out of the window and there is nothing really to replace it to keep countries from doing things that serve their own risk rather than the global interest. So, it is a different world. Do I predict a big crash coming? I don’t know, but I do think that it is going to come from different sources and simply fixing the old problems is not going to prevent the new ones.

Estimates of India’s growth this year have been brought down rapidly. Many are expecting it now closer to 6 to 6.5 percent. What are your thoughts?

There are a variety of growth projections from the private sector analysts, many of which are below, perhaps significantly below government projections and I think that certainly, the slowdown in the economy is something that is very worrisome. You can hear businesses around worrying and complaining out loud that they need some kind of stimulus. But I also think that we should pay attention to some of the arguments made by the former chief economist Arvind Subramanian that in fact we may be overestimating growth with some of the new gross domestic product (GDP) data and I would suggest, and I have been saying this for some time, we need a fresh look from an independent group of experts at the way we compute GDP and make sure that we are not in a sense having GDP numbers that mislead and cause wrong kinds of policy actions.

That is about the number, but what about the nature of the slowdown? Is India in a structural rut? Do we need something like redux of 1991 reforms?

I have been saying for some time that I really do think we need a fresh set of reforms. And we need a fresh set of reforms informed by view on what we want India to be. I would love for that view to be articulated at the very top, here is the kind of economy that we want. One off programmes here and there don’t amount to a comprehensive reform agenda for the economy. What we call reform borrowing in international markets is not really reform, it is a tactical action. What we really need is an understanding of how we are going to propel this country by the  2-3 percentage point greater growth that it needs and that needs fixing the immediate problems such as in the power sector, such as in the non-bank financial sector and those need to be done yesterday, not in the next 6 months.

It is very important that those be tackled immediately. But we also need a new set of reforms which energise the private sector to invest. Sops, stimulus of one kind or the other, are not going to be that useful in the long term especially given the very tight fiscal situation that we have. Instead, bold reforms, well-thought-out, not jumping-off-the-cliff but
seriously thought-out reforms in a variety of areas which energise the Indian people, energise the Indian markets and energise Indian business. This is what we need today and I really hope we put our best minds to think about this because absent that, my sense is we are in for not-so-good times.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Arvind Subramanian’s rush to publish his opinion on GDP data premature, says Jaimini Bhagwati

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Days after former chief economic advisor (CEA) Arvind Subramanian raised questions about India’s GDP data from 2011 to 2017, the Prime Minister’s Economic Advisory Council (PMEAC) has hit back.

Subramanian had claimed that India’s GDP from 2011 to 2017 could be overestimated by 2.5 percent every year. The PMEAC has released a 12-page report which it calls as a ‘point-by-point rebuttal’ of the claims made by the former CEA.

As per the report, “a critique of official GDP estimates must specifically critique coverage or methodology, the author does neither.” The report claims that Subramanian ‘cherry-picked’ high frequency indicators and ‘overlooked’ tax collections.

“The weakness of Dr. Subramanian’s attempt to suggest that the growth numbers are overestimated confirms that the estimation process is robust to spurious criticism,” the report said. It also said Subramanian’s paper is “not peer-reviewed and won’t stand academic scrutiny”.

To discuss the point-by-point rebuttal of PMEAC, CNBC-TV18 spoke to Jaimini Bhagwati, RBI Chair Professor at Indian Council for Research on International Economic Relations, and Rathin Roy, Member of PMEAC.

According to Bhagwati, Subramanian’s rush to the media to publish his opinion is quite premature. “There is a little bit of background to this whole issue. You might recall that there was some brouhaha when two members of the National Statistical Commission (NSC) resigned saying they were not consulted before the Niti Aayog put out the numbers on unemployment. Then some people have been uncomfortable with the way GDP has been calculated ever since the new series has come out.”

Bhagwati pointed out that he had no access to raw data. “But my own sense is that Subramanian took 17 high frequency indicators and came up with certain numbers on growth. I am a little uncomfortable particularly with the dramatic drop. On the other hand, if you look at two-wheeler sales, you look at car sales, you look at exports, they are not doing too well to say the least; but does it necessarily mean that GDP growth is at 4.5 percent? I do not think so. You look at the NBFC crisis, there is no lending in the money markets and the RBI is standing ready to provide liquidity,” he observed.

A growth rate of 4.5 percent is too low given everything that’s happening, Bhagwati noted. “It is highly premature for anyone to comment. The PMEAC is a body with a number of experts who won’t say something without having looked at what Subramanian has said and written very carefully,” he said.

“Subramanian was till recently the CEA. I would have thought that as a courtesy to his former colleagues, he would have shared his findings confidentially with those whom he knew well in the Ministry of Finance. Once they fail to satisfy him, he should go public because there is an impact on investors,” Bhagwati added.

Member of PMEAC Rathin Roy has said one does not measure GDP using indicators. “The first thing you learn in under-graduate economics is that correlation does not imply causation. One measures GDP by using a gross value added-based approach and then cross checks those measures with indicators. You do not use indicators to measure GDP,” he said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

EAC-PM dismisses Arvind Subramanian’s claims on GDP number, says former CEA cherry-picked a few indicators to prove his hypothesis

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Rejecting Arvind Subramanian’s methodology, arguments and conclusions regarding overestimation of gross domestic product (GDP) numbers, the Economic Advisory Council to the Prime Minister (EAC-PM) said the former chief economic advisor (CEA) has cherry-picked a few indicators to prove his hypothesis that India’s GDP was over-estimated post-2011-12.

In its detailed note released on Wednesday titled ‘GDP estimation in India- Perspectives and Facts,’ the EAC-PM said the note highlighted the absurdity in Subramanian’s paper that selectively ignores tax data based on the argument that the period post-2011-12 witnessed “major changes in direct and indirect taxes”.

In a research paper, Subramanian, who stepped down last year, has said India’s economic growth rate has been overestimated by around 2.5 percentage points between 2011-12 and 2016-17 due to a change in methodology for calculating GDP.

In its statement, the EAC-PM mentioned that there is a clear rationale for India’s switch to an improved GDP estimation methodology in January 2015 as it uses 2011-12 as the base year which includes two major improvements, a) Incorporation of MCA21 database, and b) Incorporation of the Recommendations of System of National Accounts (SNA), 2008.

“This change was in line with other countries that have changed their methodologies in line with SNA 2008 and revised their respective GDP figures. On average, real GDP estimates saw an increase of 0.7 percent among OECD countries,” it said.

The primary contributors to the note, namely Bibek Debroy, Rathin Roy, Surjit Bhalla, Charan Singh and Arvind Virmani, highlights eight clear points with supportive facts and arguments that debunk Subramanian’s paper in entirety as former CEA’s analysis ends on March 31, 2017, while the only major tax change (GST) was introduced on July 1, 2017.

However, the note concludes with the point that India’s GDP estimation methodology is by no means a perfect exercise and the ministry of statistics and program implementation is working on multiple aspects to improve the accuracy of economic data.

“Going forward, Indian National Income Accounting is bound to change for good and an important step in accomplishing that will involve criticism from experts and academics. But the country’s interests are not served by imparting sensationalism through the negativity that questions the credibility of the system,” it added.

Last week, the government refuted the claims of Subramanian and said it will come out with a point-by-point rebuttal in due course. The Economic Advisory Council will examine in detail the estimates made in Subramanian’s paper and come out with a point-by-point rebuttal in due course, it said in a statement.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Government dismisses ex-CEA Arvind Subramanian’s GDP numbers, says it follows accepted procedures

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Dismissing the contention of the former chief economic advisor (CEA) Arvind Subramanian regarding over-estimation of GDP numbers, the government said Tuesday it follows accepted procedures and methodologies for arriving at projections of national income.

The Ministry of Statistics and Programme Implementation (MoSPI) also added that its projections of the Gross Domestic Product (GDP) growth are broadly in line with estimates of various national and international agencies.

Subramanian has deduced that India’s economic growth rate has been overestimated by around 2.5 percentage points between 2011-12 and 2016-17 due to a change in methodology for calculating GDP.

India’s GDP growth rate between this period should be about 4.5 percent instead of the official estimate of close to 7 percent, he said in a research paper published at Harvard University.

“India changed its data sources and methodology for estimating real GDP for the period since 2011-12. This paper shows that this change has led to a significant overestimation of growth,” he said in the paper.

The MoSPI said Subramanian’s overestimation of India’s GDP growth is primarily based on an analysis of indicators, like electricity consumption, two-wheeler sales, commercial vehicle sales using an econometric model and associated assumptions.

“The estimation of GDP in any economy is a complex exercise where several measures and metrics are evolved to better measure the performance of the economy,” the MoSPI said.

With any base revision for GDP estimation, as new and more regular data sources become available, it is important to note that “a comparison” of the old and new series are not amenable to simplistic macro-econometric modelling, it said.

It may also be seen that the GDP growth projections brought out by various national and international agencies are broadly in line with the estimates released by MOSPI.

“The GDP estimates released by the ministry are based on accepted procedures, methodologies and available data and objectively measure the contribution of various sectors in the economy,” it added.

The ministry stressed that with structural changes taking place in the economy, it is necessary to revise the base year of macroeconomic indicators like GDP, Index of Industrial Production (IIP), Consumer Price Index (CPI), periodically to ensure that indicators remain relevant and reflect the structural changes more realistically.

Such revisions not only use the latest data from censuses and surveys, but they also incorporate information from administrative data that have become more robust over time.

In India, the Base Year of the GDP Series was revised from 2004-05 to 2011-12 and released on January 30, 2015, after adaptation of the sources and methods in line with the System of National Accounts 2008 (2008 SNA).

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow