Economy is in great slowdown: Arvind Subramanian

New Delhi: Former Chief economic adviser to the BJP government reveals what the nation is facing now is “not an ordinary economic slowdown.”

Former Advisor to the BJP government, Arvind Subramanian in his exclusive interview with NDTV also cautioned against believing GDP (Gross Domestic Product) data as absolute indicators of an economy’s prosperity.

Mr Subramanian, a graduate of IIM-Ahmedabad and the University of Oxford, suggested the data like (non-oil) import and export rates (down to 6 per cent and -1 per cent, respectively), capital goods industry growth (down 10 per cent) and consumer goods production growth rate (from 5 per cent two years ago to 1 per cent now) are the better indicators rather than the GDP.

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“…there are also export figures, consumer goods figures, tax revenue figures… what we do (referring to his paper Validating India’s GDP Growth Estimates) is take all these indicators and then look at a previous era of slowdown – 2000 to 2002 – and what you find is that even though the GDP growth was around 4.5 per cent all these indicators were positive,” he said.
“… this is not an ordinary slowdown… it is India’s great slowdown,” Mr Subramanian said.

Speaking of government data on India’s GDP, the GDP has trended downwards for seven consecutive quarters, dropping to 4.5 per cent for Q2 of 2019/20; it stood at 8 per cent in Q1 of 2018/19.

“…they (key indicators) are either in negative growth or barely positive growth territory… the comparison is to the real sector of the economy… growth, investment, export and import… which matter for jobs. It is also a matter of how much revenue the government has to spend on social programmes,” Mr Subramanian said.

“The real sector economy is slowing… jobs, you know, people’s incomes, people’s wages and of course government revenues”.

Mr Subramanian questioned about the whole host of indicators in the month of July for which growth rates had “collapsed”. He asked “despite all these large shocks economic growth declined by very little, slipping from 7.7 per cent to 6.9 per cent. This situation invites a question: is it really possible that these five large adverse shocks had such little impact on GDP growth?”

When Mr Subramanian made his research public the government criticized him on several grounds, advancing the productivity and consumption surge arguments.

Earlier, the RBI in its survey on economic situation found the people felt the general economic situation had only worsened over the preceding 12 months last year.

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