25 June, 2021

OPINION | A Five Per Cent Growth May Not Sound Too Good But It's Not Quite Death

A slew of measures taken by the government will help achieve a 6.5 per cent growth in 2020-21, writes Bibek Deb Roy, the chairman of the economic advisory council to PM Modi

Photograph by PTI
OPINION | A Five Per Cent Growth May Not Sound Too Good But It's Not Quite Death

It is human to focus on the transient. By transient, I mean 5 per cent real growth in Q1 of 2019-20, which has caught most people, not just the RBI, unawares. As most people probably know, methodology and database for national income ­accounts was revised in January 2015 and the base year bec­ame 2011-12. Hence, a comparable series cannot be dragged back beyond 2011-12, nor can growth rates be dragged back bey­ond 2012-13. Let’s track the quarterly real GDP growth rates since 2012-13. What’s immediately evident is volatility. In 2012-13, a 4.9 per cent growth in Q1 was followed by 7.5 per cent in the immediate next quarter. Likewise, 5.3 per cent in Q4 of 2013-14 was followed by 8 per cent in Q1 of 2014-15, the immediate next quarter. In 2014-15, a growth of 5.9 per cent in Q3 was followed by 7.1 per cent in Q4. One quarter’s dip shouldn’t be interpreted as India being on a growth trajectory of 5 per cent, as some people have suggested. Past statistics don’t prove that proposition. If anything, they prove the converse. Predicting the...

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