Former IMF Executive Director for India Surjit Bhalla has dismissed allegations that India's GDP figures were manipulated to present a stronger growth picture, saying there is “absolutely no politics” involved in the downward revisions and “no evidence” that the data was overstated.
Speaking to India Today’s Rajdeep Sardesai during a discussion on the revised GDP figures, Bhalla acknowledged that questioning the accuracy of government data is legitimate in a democracy. However, after examining whether the revisions had artificially boosted the growth rate, he said he found no evidence to support such claims.
“I come out squarely that there is no evidence to date that we have played politics with the numbers,” Bhalla said.
Bhalla was responding to criticism of the GDP data, including former Finance Secretary Subhash Chandra Garg's claim that first-quarter GDP estimates had been revised several times, from roughly Rs 86 lakh crore to Rs 80 lakh crore. Critics have argued that the downward revision helped produce the 7.8% growth figure.
Bhalla, however, said the issue should be assessed by looking at the individual components of the national accounts rather than focusing only on the headline growth rate.
‘WHY WOULD ANY GOVERNMENT NOT BOOST CONSUMPTION?’
Bhalla said he had examined whether the revised figures contained signs of an effort to artificially increase GDP.
“If we wanted to boost up the GDP, why would anybody, any government, not boost up consumption?” he asked.
He noted that consumption is difficult to measure and could theoretically be an area where figures might be raised if a government wanted to inflate growth.
However, Bhalla said the revised numbers actually point in the opposite direction.
“We have got consumption at a lower rate than what was there in the old data,” he said.
According to Bhalla, this undermines the argument that the revisions were intended to artificially increase the headline growth rate.
PRIVATE-SECTOR DATA SUPPORTS HIGHER INVESTMENT
Bhalla's second key argument focused on investment.
He cited a significant amount of private-sector data showing a sharp rise in investment, saying this provided independent support for the increase reflected in the revised GDP figures.
“There’s a lot of corresponding data on why investment has gone up,” Bhalla said, referring to private agencies and other sources that have tracked the rise in investment.
“And investment adds to GDP,” he added.
His argument was that the GDP revisions should be considered alongside other economic indicators that also point towards stronger investment activity.
IMPORTS AND IMPORT PRICES PLAY A ROLE
Bhalla also highlighted imports as another factor that needs to be considered when evaluating the revised GDP numbers.
“Look at what’s happened to imports and import prices,” he said.
He explained that imports act as a deduction in GDP calculations, while movements in import prices can influence the implied GDP, particularly in sectors such as manufacturing that rely heavily on imported inputs.
“If import prices go up, then the implied GDP, let's say in manufacturing where a lot of imports come in, are boosted up because import prices have gone up,” he said.
Bhalla's broader point was that changes in headline GDP growth need to be viewed alongside movements in consumption, investment, imports and prices.
‘ONLY IN INDIA’ DEBATE OVER BASE YEAR
Bhalla also criticised what he described as an unusually Indian debate surrounding rebasing and revisions.
“I think, as I also tweeted under the hashtag only in India, only in India would you have the debate that the base year has changed,” he said.
He argued that India's economy is evolving rapidly and that statistical revisions are necessary as its economic structure changes in a “very dynamic fashion”.
Bhalla also defended India's statistical institutions, describing the economists and statisticians responsible for compiling the national accounts as among the most conservative professionals he has encountered.
However, he stressed that his defence was not based solely on his faith in the statisticians, but on his own examination of the data.
“The Indian national accounts, the people who put out the national accounts in India, who constructed, are some of the most conservative economists and statisticians that I've met,” he said.
QUESTIONS ARE VALID, BUT NO EVIDENCE OF MANIPULATION
Bhalla agreed that government data should be subjected to scrutiny.
“It’s a legitimate, we have a democracy, and we question government. So absolutely, absolutely legitimate point that people are raising, are the data accurate?” he said.
He said he had made a “solid attempt” to investigate the more serious allegation that GDP growth was being deliberately increased for political reasons.
His conclusion was clear.
“There is no evidence to date that we have played politics with the numbers,” Bhalla said.
He also rejected the claim that the figures had been exaggerated.
“There is no evidence that the data was in any way exaggerated,” he said.
Bhalla's remarks come amid an ongoing debate over India's revised national accounts, including the downward revision of earlier GDP estimates, changes to the base year and questions about comparisons between the new and previous series. While Bhalla rejected allegations of political manipulation, the broader discussion has also focused on the technical factors behind the revisions and how changes in India's economic structure are reflected in the GDP series.
