Indian Prime Minister Narendra Modi's former economic advisor has rubbished India's claim to the fastest growing economy in the world - but that's just the tip of the iceberg.

In the run-up to the recent Indian parliamentary election,  the federal government under Prime Minister Narendra Modi desperately tried to hide the elephant in the room – which was the struggling Indian economy. Modi’s electoral machine probably succeeded in pushing the government’s version of reality, given his party’s resounding win at the polls.  

But the fig leaf has slipped. Modi’s former economic adviser Arvind Subramanian last week in a working paper at Harvard concluded that the country’s growth rate was not the high seven percent as the government wanted Indians to believe, but a measly 4.5 percent.

What this means is that, contrary to the claim that India was one of the fastest growing economies in the world, it has dropped at least 50 places down. The government is denying the figures and has said it will come out with a pointed rebuttal of Subramanian’s claims. But,  the adviser’s bombshell has attracted a lot of attention as several independent economic experts and observers already suspected this.

The sexed-up economic figure of seven percent growth is the latest in the long line of data gaming that the Modi government has been accused of. It started in 2015 with the change in the manner in which GDP (Gross Domestic Product) was calculated. The government shifted the base for calculation from the wholesale price of a product received by the producer to the market price paid by the consumer. 

This instantly pushed up the GDP, attracting disbelief from a section of the intelligentsia and economic experts. And then, in November 2016, came Modi’s shock move to ban currency notes of the value of Rs 500 and Rs 1000. The demonetisation, considered by many to be the second most thoughtless decision in independent India since the declaration of Emergency in 1975,  all but killed the economy the effects of which continue to be felt three years later.

Now, leave aside the economic figures and data for a moment. To check how India's economy is doing, look around, examine anecdotal evidence and empirical data. 

The real estate industry, across the country, is in a coma since demonetisation. The automobile industry has seen sales slump by 21 percent in May compared to the same month the previous year, the biggest fall in sales in the last 18 years. But the biggest breaking news of them all is that unemployment figures are at their highest level in 45 years.

As the global business website, Quartz put it, “lower consumer spending, sluggish investments, and slower growth in agriculture and manufacturing, are retarding growth.”

The federal BJP (Indian Peoples’ Party) government has covered itself with disgrace as far as dishing out data is concerned. While it is understandable that any government would want shiny figures on its economic performance, it is baffling that it may have resorted to window dressing data when the source data does not reflect the alternative reality that the government has created.  

Economist and the leading opposition party, Congress, Member of Parliament Jairam Ramesh, writing in the Indian Express, said the Modi government claimed that a mammoth $2 billion had been saved because of a new system of transferring subsidies directly to beneficiaries. Later, when the government’s auditor, the Comptroller and Auditor General (CAG), examined it, it brought down the savings to just under $254 million.  The remaining savings had occurred due to a fall in global oil prices. 

In another instance, before the elections, a study conducted by the National Sample Survey Office (NSSO) to calculate the GDP found that the Central Statistics Office (CSO) had taken figures from 38.4 percent of companies that could not be traced. In other words, ghost companies, or companies that existed only on paper. 

Reports quoting economist Arun Kumar said the credibility of the new figures was in doubt and it seemed that the statistics were being manipulated to favour the Modi-led government.   The government conceded that this had happened but in 16.4 percent of companies, not 38.4. This showed that though the figures could be disputed, there was a problem of cooking figures in the name of fictitious companies.

Within the government, straight-speaking officials have been targeted for refusing to kowtow to demands from the top. Two non-government members in the National Statistical Commission (NSC) resigned in the months leading up to the elections when their report on joblessness touching a 45-year high was not made public. 

Top ministers even denied claims that such figures on joblessness existed. Once elected, one of the first things that the government did was to release the very same figures they had denied. Now that the BJP and Modi had won the elections, seemingly there was no need to hold back on the truth.

The Modi government is altering the ecosystem that governs statistics of key sectors that could enable it to control the narrative. On May 23,  the day election results came out, the government issued an order merging the Central Statistics Office (CSO) and the National Sample Survey Office (NSSO). These two bodies, known for their independent functioning, have been merged into a single organisation called the National Statistics Office (NSO) which would come under the control of the Ministry of Statistics and Programme Implementation (MoSPI). 

The government has assured that the NSO would be monitored by parliament to preserve its independence. But given the Modi government’s sensitivity to statistical figures that could portray their tenure in poor light one will have to wait and see what will happen in the event of a new set of adverse economic data that the NSO might cook up.

Meanwhile, the controversies over questionable data do not appear to have seeped into everyday discourse with the pro-Modi voter treating the issue either with disdain or unable to comprehend the long-term consequences of faulty figures.  That, ultimately, could be the real cause for worry.

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