Last week, former chief economic advisor Arvind Subramanian wrote in a research paper that India’s gross domestic product
actually grew at 4.5 per cent (real) in 2011-17, rather than the 6.9 per cent growth visible in official government numbers.
Subramanian contends in his paper that real sector indicators show a considerable slowing down in the reference period (2011-12 to 2016-17). While he analysed 17 different indicators excluding tax growth, a cursory look at six indicators including taxes shows that these areas did experience slowdown in the six-year period.
Growth in bank credit gradually came down from 17 per cent in the beginning of the reference period to 8 per cent at the end. Industry credit growth contracted in the last year of the period. In the six prior years, credit growth ranged between 15 and 40 per cent, shows Chart 1. Trade contracted in absolute terms, with exports shedding a tenth and imports dropping 20 per cent, show Charts 2 and 3. Low oil prices exacerbated it in 2015-16.
Annual growth in electricity consumption remained 5-8 per cent in the reference period, lower than the rate at which it grew in the previous six years, reveals Chart 4. The next graphic (Chart 5) shows that cars, two-wheelers and commercial vehicles too were produced at a slower rate.
Taxes collected by the Centre and states grew by 10-17 per cent in the reference period, slower than previous six years in most cases, shows Chart 6. However, tax-GDP ratio improved marginally. This proves an overestimation in the official numbers or not is another question!
Compiled by BS Research Bureau