India's Gross Domestic Product (GDP) grew at the same annual average rate during the terms of the United Progressive Alliance and National Democratic Alliance governments, at least until the coronavirus pandemic struck.
According to new data released by the Ministry of Statistics and Programme Implementation, India's GDP grew at an annual average rate of 6.8 percent from 2004-05 to 2013-14—the 10 years Manmohan Singh was the prime minister (PM).
In the first six years of Narendra Modi's tenure as PM—before the pandemic struck and pushed India into a recession—India's GDP again grew by 6.8 percent on an average from 2014-15 to 2019-20.
If the two pandemic-hit years of 2020-21 and 2021-22 are taken into account, the average GDP growth rate under Modi drops to 5.4 percent.
The recently-released annual GDP growth data stretches back to 1951-52. Until now, comparable growth rates for the current GDP series with 2011-12 as the base year was available only till 2005-06.
The current GDP series, introduced by the statistics ministry in early 2015, attracted heavy criticism as it showed a big jump in growth even as high-frequency indicators painted a grimmer picture. For instance, the new series raised the GDP growth rate for 2013-14 to 6.9 percent from 4.7 percent under the previous series.
This number has subsequently been revised down to 6.4 percent.
The statistics ministry attributed the revision to a shift in focus to measuring value-addition based on a wider dataset of corporate earnings from volume-based growth in manufacturing.
However, comparison across years was difficult as the new series only provided growth rates starting from 2012-13. This led to calls for a 'back series'.
Back series controversy
In July 2018, the Sudipto Mundle-led committee on real sector statistics, set up by the National Statistical Commission, said India clocked a growth of 10.8 percent in 2010-11 as per the new GDP series. This was higher than the 8.9 percent estimated under the old series.
Further, the committee's estimates showed GDP growth averaged 8.0 percent per year during the 10 years of the Singh government as per the new series, while growth in Modi's first four years as PM averaged 7.3 percent per year.
These numbers spilt over into the political arena, with the Congress saying the data proved "like-for-like, the economy under both UPA terms outperformed the Modi govt (sic)".
However, a month later in August 2018, the statistics ministry said the GDP back series given by the committee on real sector statistics was not official but only "experimental results".
The official GDP back series, released in November 2018, showed GDP grew 7.4 percent per year on average from FY15 to FY18. Meanwhile, the annual average GDP growth rate for the last nine years of Singh's tenure as PM was revised to 6.7 percent, leading to another outcry and accusations of political interference in the calculation of India's official statistics, especially with the 2019 general elections just around the corner.
Full comparability
The numbers now released (external link) by the statistics ministry allow comparisons to be made across several decades. Some of the striking highlights are as follows:
>> The 6.6 percent contraction in the GDP in 2020-21 is the largest ever since 1951-52. The next worst year was 1979-80, when the GDP contracted by 5.2 percent.
>> Since 1951-52, India's GDP has contracted on six occasions: by 6.6 percent in 2020-21, 5.2 percent in 1979-80, 2.6 percent in 1965-66, 0.6 percent in 1972-73, 0.4 percent in 1957-58 and 0.1 percent in 1966-67.
>> The 2021-22 GDP growth rate of 8.7 percent is India's fourth-highest since 1951-52. The highest rate of growth of 9.6 percent was recorded in 1988-89. As such, India has never hit double-digit growth when it comes to real GDP.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
