TeaThe GDP data released last week is important not only because it gives us new insights into the pandemic and the years following the pandemic, but also because of what it says about how India and its leadership have handled that difficult situation. Navigated the economic downturn over the period.
With the benefit of hindsight and more data, it turns out that Finance Minister Nirmala Sitharaman has indeed been very capable of how she has steered the Indian economy through the pandemic and subsequent turbulence.
Its critics would do well to be fair and pay attention.
But first understand the data cycle…
Typically, the cycle of GDP data involves six phases. The first advance estimates for a financial year are released in January of that year and include data for about nine months (April-December). The second advance estimate is released in February and another month is added to the data being checked.
At the end of the financial year, provisional estimates are released based on the figures for the full year. As the title suggests, this data is still provisional and does not include deeper elements such as how the informal sector did, or other major data sets such as the Annual Survey of Industries, which provide granular information on individual sectors. Is.
After a year, the government releases the ‘First Revised Estimates’, which includes comprehensive and more accurate data. and two years later, the ‘Second Revised Estimates’. It is only after three years that we get the final ‘Third Revised Estimates’.
if you get to the bottom of it Press release On GDP data released by the Ministry of Statistics and Program Implementation (MoSPI), you will find various additional sources of information that have been used to arrive at the revised estimates for each year.
This is a normal cycle that is followed every year. However, the impact of the pandemic on the economy means that the revisions made to the figures for 2020-21 and 2021-22, in particular, are more significant than usual.
The years 2020-21 and 2021-22 included nationwide lockdowns and sporadic regional lockdowns. This severely reduced the capacity of the Ministry of Statistics and Program Implementation to collect data during those years. So, for those two years, the word ‘temporary’ carried a lot more emphasis than in normal years.
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…then what does it say
Before going into what the revised data shows, I must mention that I was part of Finance Minister Nirmala Sitharaman’s team from January 2020 to August 2022. Hence to prevent any allegation of bias, this analysis is going to focus only on the dry GDP data. in the public domain by the government, with any analysis confined to them only Number.
The second revised estimates for 2020-21 suggest that the contraction in India’s GDP was less severe than initially thought. While the provisional estimates for the year pegged the contraction at 7.3 per cent, and the first revised estimates pegged it at 6.6 per cent, the second revised estimates put the pandemic-affected year’s contraction at an even more modest 5.8 per cent.
It is unlikely that this revision was done for the first half of the year, when the nationwide lockdown was in effect. This implies that once the lockdown was eased, the recovery in economic activity was much faster than we had initially thought.
While this was in part due to the interplay of pent-up demand and rising supply, it is also a strong positive statement on the efficacy of government policies to ease the initial disruption. Clearly, businesses were in a position to jump back into action, while those who needed assistance received enough to ensure that consumption did not drop too badly.
For the next year, that is FY22, India’s GDP growth is pegged at 9.1 per cent in the first revised estimates, up from 8.7 per cent in the provisional estimates. This is also very important. Usually, all other things being equal, an upward revision of the base year means that the increase in the subsequent year is reduced.
In such a scenario, the upward revision in growth for 2020-21 should mean that the growth for 2021-22 will be revised downwards. But still it was revised upwards. This means that the surge from the first year of the pandemic was much stronger than initially thought. Again, a lot of credit goes to the government.
There are likely to be many who will question the veracity of the government’s figures and the amendments made. However, it is important to be consistent with such criticism.
If the government’s data-gathering, processing and presentation process is questionable when it comes to GDP numbers, then the same allegation must be true for other government statistics, such as reports that India’s unemployment rate is high. Was on the level. 45 year highor that consumer demand fell first time in 40 years, If bad news is accepted unquestioningly then good news should be as well. Conversely, bad news should be scrutinized with the same intensity as good news.
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bad hand of nirmala sitharaman
Sitharaman has been treated badly since the beginning of her tenure as Finance Minister. Within about nine months of taking office, he had to deal with a global pandemic that required an unprecedented level of quick thinking and action.
As the impact of COVID-19 on the economy began to subside by 2022, India was facing the double whammy of skyrocketing oil prices due to the Russia-Ukraine war, and a collapse in global demand due to the near-recessionary developed world. ,
Sitharaman still has about 15 months left in her tenure as finance minister, in the likely event that the cabinet remains unchanged till the general elections. There is still much to be addressed, such as a continued contraction in the manufacturing sector, a private sector still reluctant to invest, and a seemingly insurmountable unemployment problem.
However, it is also clear that his handling of the pandemic and its after-effects has been remarkably adept, and should go a long way in silencing his critics. It’s all in the data.
Thoughts are personal.
(Editing by Anurag Choubey)