India’s GDP: Deflating the right way4 min read 12 Oct 2017, 11:17 AM IST
There is a need to stick to one deflation method for all sectors to arrive at reliable data needed for sound public policy
A unending debate on the gross domestic product (GDP) growth numbers brought out by the Central Statistics Office (CSO) has been doing the rounds. In 2014-15, the CSO updated the methodology of calculating various macroeconomic parameters produced in the National Accounts Statistics (NAS), in sync with the System of National Accounts (SNA) (2008), which is the internationally agreed, standard set of recommendations on compiling measures of economic activity. However, there is a mismatch between recent trends in the growth rate and an array of high-frequency macroeconomic growth indicators. In light of this, I discuss the shortcomings of the deflation methodology used to calculate growth rates.
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