How COVID-19 derailed govt’s plan on GDP and CPI

The revision of the consumer price index and base years from 2011-12 and 2012, respectively, were dependent on the outcomes of the consumer expenditure survey of 2017-18 that the government decided to junk recently.

The recession forecast caused by the -19 pandemic has derailed the government’s plans to carry out the consumer expenditure survey in 2020-21, further delaying the base revision exercise for the country’s key macro-economic indicators and raising data quality concerns.

The revision of the consumer price index and GDP base years from 2011-12 and 2012, respectively, were dependent on the outcomes of the consumer expenditure survey of 2017-18 that the government decided to junk recently.

 

Besides challenges related to carrying out field surveys amid the pandemic, primary concern pertains to the current year not being a normal economic year.

Base year revision process is recommended on a five-year basis to keep up with the structural changes in spending patterns; however, it should be a normal economic year.

The government had earlier decided to revise the base year from 2011-12 to 2017-18.

If the survey is conducted in 2021-22, or 2022-23, the base year revision would finally happen much after 2025-26, an over 15-year gap in revision.

Former chief statistician of , Pronab Sen, who heads a committee to improve quality of Indian statistics, told that CPI and GDP were ‘seriously outdated’ and needed a revision.

“The GDP based on 2011-12 is already very old. The revision should have been done sometime around 2017-18, and that’s why the consumer expenditure survey was taken up.”

He said that while 2020-21 was completely ruled out for carrying out the survey, the government would have to take a call for 2021-22 and see whether it would be a normal year.

will see negative growth. But even if you recover from it, it should seem that the normal growth momentum is returning and that one could use it as a base year. The base should capture a stable economy,” said Sen, who has estimated GDP to contract 10.8 per cent with first three quarters reporting negative growth.

Meanwhile, ratings agency has projected 2020-21 to see the worst recession in country’s history, with GDP to contract by 5 per cent.

It has said that about 10 per cent of GDP in real terms could be permanently lost, so going back to the pre-COVID growth level was unlikely over the next three years.

The earlier GDP base was…

Related posts

Add a Comment

Your email address will not be published. Required fields are marked *