Famous economist Kashik Basu attended a discussion on GDP data (whether India’s GDP figures are correct or not?) On the basis of the research done by CEA Arvind Subramanian on the alleged statistics of overstating GDP data, the previous findings hurt.
In his Indian Express book, Basu explained his thoughts on this subject. The essence of Basu’s article is that he does not think “India has a clear flaw in the GDP calculation” and “the difference between economic indicators and GDP data shown by Subramanian” reveals the underlying turmoil in the economy. ”
The problem here is that there is no clarity in Basu’s argument. After analyzing 17 major economic indicators, Subramanian also said that the weakness seen in the economy after 2011-12 is not linked to higher GDP data under the new series.
Subramanian said that the GDP growth should be at least 2.5 percent. This is a clear drawback in the calculation process, for example, did not adjust the real development scenario on the ground.
Basso’s saying means that he does not think there is a clear problem in calculating GDP figures but he acknowledged that the supermarket paper only showed weakness of the economy during the disputed period? The fact is that there was already a mismatch.
By saying that the economy has started to slow down, there are some important recommendations for Narendra Moody’s government in Paso “to avoid short term risks and to promote sustainable sustainable development?”
General recipes – Higher family investments, payment of infrastructure, more emphasis on education, etc. – Recommended from time to time by economists.
But with one exception – Pasha proposed to mitigate roadmap for financial consolidation.
“We should be prepared to make a significant increase in the fiscal deficit for a year or two, this will increase the demand for goods and become an urgent need for Indian companies and farms,” Basso wrote, “If additional expenditure is poor and agricultural It is directed in the area, those who are in dire need of it. ”
Basso’s proposal has a great deal of meaning. At a time when the economy is falling on all fronts, there is no point in sticking to the fiscal deficit. But, at the same time, it was not always said Basu.
In 2013, when he was Chief Economic Advisor (CEA) in the United Progressive Government (UPA), Basso argued in favor of staying away from the roadmap even during the recession. He did not recommend this solution at that time.
No consideration has been made yet to review the target of disability. You had to keep in mind that in industrialized countries, due to the vertical trend everywhere, discussion about recession in financial consolidation is discussed.
In other words, Basso wants that the government temporarily retain the path of financial knowledge and spend more to encourage demand.
But the other side is that the Fiscal Responsibility and Budget Management Act (FRBM), which was designed to bring financial caution to the economy, lost its full significance.
India has already wandered from the road map of fiscal deficit for at least three years and it will have implications for fiscal and monetary policies.
If this happens, then India has always failed to fulfill the obligation of fiscal deficit under the FRBM. It will raise some unresolved questions about the country’s commitment to fiscal conscience.
FRBM grew up in 2003 to make the government accountable for the sound management of its finances, but has not had much success yet.
This act was amended in 2016. The committee has taken a path to reduce the fiscal deficit by 3 percent in the years after 2020.
Of course, the law provides some scope for the central government to deviate from the deficit target; For example, if there is a serious financial crisis in the country due to drought, but the question is whether we have already reached this point?
Further reducing the financial losses, the MPC will not be happy with anything and can leave some dissatisfied faces in the committee about the government’s financial commitment.
This interest can be reflected in decisions that in turn affect development. Overall, the GDP failure and Basu’s evaluation of the drug to cure the economic downturn is confusing and can disturb the MPC.