GDP growth vs reality: Expert flags crisis despite rosy numbers

Former Chief Economic Adviser Arvind Subramanian raised concerns over India's latest GDP figures, calling them "absolutely mystifying" and difficult to comprehend.

Speaking at the India Today conclave, Subramanian highlighted discrepancies in the numbers, particularly in inflation estimates and private consumption growth. He pointed out that while the economy purportedly grew at 7.5%, private consumption lagged behind at 3%.

Subramanian also criticized the omission of errors in the latest data, which he claimed amounted to about 4.3 percentage points out of the estimated 7.6% growth for FY24. He further noted a sharp decline in foreign direct investment (FDI) over the past few quarters, raising questions about India's attractiveness as an investment destination.

Meanwhile, former Chief Statistician Pronab Sen expressed scepticism about the accuracy of the GDP growth figures, suggesting that the first quarter's 7.8% growth may be overestimated and that a more accurate figure would be around 6.5%. Sen emphasized that GDP figures only offer a partial view of the economy, failing to capture issues such as high levels of unemployment.

These concerns come amidst India's reported better-than-expected 8.4% GDP growth in the October-December quarter of fiscal year 2024, marking the fastest pace in one-and-half years. The National Statistical Office (NSO) has also revised upward the GDP estimates for the first and second quarters of the fiscal year.

However, beyond the rosy GDP figures, the Periodic Labour Force Survey (PLFS) data for July 2022 to June 2023 reveals a significant number of individuals in India engaging in self-employment or unpaid labour, indicating deeper economic challenges beyond mere growth numbers.