A former official casts doubt on India’s GDP figures

ALMOST TWO years ago Arvind Subramanian, then India’s chief economic adviser, published a little-noticed passage in the finance ministry’s annual economic survey. The previous two years posed a “puzzle”, he wrote. India had reported miracle growth in GDP (averaging 7.5%) despite miserable growth in investment, exports and credit. He looked for comparable examples elsewhere since 1991. He found none. No country had grown faster than 7% in such circumstances. None, in fact, had grown faster than 5%. India’s rapid expansion, he warned, might be hard to sustain.Or, indeed, hard to believe. Mr Subramanian’s official position meant he could not say that loudly then. But he is saying it now. In a paper published by Harvard University, where he is a visiting fellow, he argues that India’s growth figures have been greatly overstated. From the 2011-12 fiscal year to 2016-17, its economy officially expanded by about 7% a year, eventually outpacing China’s to become the fastest-growing big economy. That boast has helped entice over $350bn of foreign investment in the past seven years. But India’s true growth, Mr Subramanian thinks, is more like 4.5%. Rather than outperforming China, India has underperformed Indonesia.
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