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Watch | Data on Which GDP Calculated A Major Concern, Soon GDP Could Become Unreliable: Pronab Sen

In an interview with Karan Thapar, Sen says that the GDP growth figure only conveys a partial picture of the state of the economy. It does not reveal high levels of unemployment or increasing demand for NREGA.
Karan Thapar and Pronab Sen. Photo: The Wire

In a comprehensive interview to discuss concerns about how India calculates its GDP and whether GDP conveys the full picture of the state of the economy and, in particular, the condition of the majority of the country’s population, India’s former chief statistician Pronab Sen has said the data on which India’s GDP is calculated is “a major concern”. He added that if this is not corrected soon, India’s GDP growth figures could become “unreliable”.

The key concern identified by Sen, who is also the present Chairman of the Standing Committee on Statistics, is the way the consumer price index (CPI) and the wholesale price index (WPI) are calculated and, specifically, the basket of goods on which they are based. This basket has not changed for 12 years, during which period the consumption patterns of the Indian population have changed dramatically. Therefore, the baskets of goods on which WPI and CPI are based are now almost comprehensively out of date.

In a 50-minute interview with Karan Thapar for The Wire, Sen said GDP and the GDP growth figure only convey a partial picture of the state of the economy. They do not reveal high levels of unemployment or increasing demand for the rural employment guarantee scheme NREGA or the fact that 58% of the workforce is self-employed – which he interprets as distress employment. He adds that perhaps as many as 95 million people, who are said to be self-employed, do not earn any income at all. Therefore, when politicians – and sometimes economists – present the GDP growth figure to claim the country is soaring, it doesn’t capture the truth about the majority of the Indian population who are poor.

Sen says he believes the Q1 GDP growth figure of 7.8% is an overestimation. He believes 6.5% is more accurate.

In the interview, he explains why he believes the recent Periodic Labour Force Survey finding that 58% of the workforce are self-employed is not an indication of increasing self-entrepreneurship (as claimed by SBI economists) but distress employment.

There’s also a substantial discussion about whether Prime Minister Narendra Modi is right to claim India will be a developed country by 2047. Sen says if this means India will achieve the World Bank criteria of per capita income of $13,200, that, he says, is possible. If, however, the prime minister means India will reach the level of the UK’s $45,000, then that is a flat resounding no.

Sen adds that even if you reach the World Bank criteria of $13,200 per capita income, India could still have 50% of the workforce self-employed and up to 100 million people earning no income at all.

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