Ministry briefs Rajan on new GDP calculation

The Ministry of Statistics & Programme Implementation has briefed the RBI Governor Raghuram Rajan about the new method which the government has started for calculating economic growth and inflation figures.

"We briefed him about the new series about GDP and CPI calculation recently. Now they have no doubts about it" Ashish Kumar, Director General, CSO told PTI.

Rajan had recently said that there was lack of clarity about the new method of calculating the GDP numbers and the RBI would need some time to understand it.

"We do need to spend more time to understanding the GDP numbers.

“We will be watching the February 9 release with great care and dwell deeply into what we see there.

“At this point this is premature to take a strong view based on these GDP

numbers," he had said earlier this month after releasing RBI's bi-monthly monetary policy.

On February 9, the Central Statistics Office under MOSPI estimated the real GDP growth (with 2011-12 as the new base) at 7.4 per cent in 2014-15 as against 6.9 per cent in 2013-14.

Besides, the base year has been shifted to 2011-12 from 2004-05 earlier.

For measuring retail inflation based on Consumer Price Index, government would henceforth calculate it with a shift in base year to 2012 from 2010.

As per the revised series of CPI, retail inflation in January moved up to 5.11 per cent as against 4.28 per cent in December 2014.

CPI-based inflation is an important figure for the Reserve Bank to take decisions on policy rates during monetary policy review.

Among others, economists have also raised questions about the new methodology that has pushed up the gross domestic product forecast to 7.4 per cent for the current fiscal, saying it is not in sync with key parameters such as tax collections and credit growth.

Image: RBI Governor Raghuram Rajan; Photograph: Reuters