Noted economist Dr Debapriya Bhattacharya has questioned key macroeconomic figures, saying various economic projections based on serious anomalies in data is leading to data anarchy.
He questioned the GDP growth figures as put forward by the finance ministry and per capita income which has now shown to have overtaken that of India.
Presenting a budget analysis of Citizens’ Platform for SDGs – a coalition of different NGOs – he said it is incomprehensible the rise in per capita income during the Covid pandemic time, which the finance ministry shows to have risen to $2,227 in the current fiscal year from $2,064 in the previous fiscal year. In the budget speech the finance minister has said it will further rise to $2,462.
“Financial year 2021 was weaker than FY20 and yet the budget estimates says FY21 was better. I question this assumption,” he said.
Debapriya, who is also convener of the platform, said the proxy indicators also tell a different GDP story. For example, how could public investment increase when annual development expenditure has dipped seriously this fiscal year.
The ministry has shown that public investment has increased to 24.2 percent this fiscal year against last fiscal year’s 23.6. but while ADP implementation was 74.9 percent last fiscal year, it is only about 50 percent until April this fiscal year, leaving doubts about how much more could be implemented in the remaining two months of the financial year.
Similarly, private investment is shown to have increased from 23.6 percent last fiscal year to 24.2 percent this fiscal year. But contrarily, private sector credit growth decreased from last fiscal year’s 8.6 percent to 8.3 percent until this April.
At the same time, key indicators such as capital machinery import and Quantum Index of Industrial Production and undertutilised electricity capacity have dipped.
So, in a sum-up, he said the GDP growth rate of 6.1 percent in FY21 does not consider the second wave of the pandemic.
And as such improvement in capital productivity is also not plausible.
Talking on the proposed budget’s poverty outlook, Debapriya said the Eighth Five Year Plan had projected hardcore poverty to reduce to 8.3 percent in 2024, but the budget documents think it will reduce at twice the rate to 4.5 percent. This, he said, has been done not taking into account the Covid situation.
“Since the new poor were not considered in budget formulation, that is why they have not figured out in the proposed budget,” he said.
“Both the planning and finance ministries are providing their own data, leading to a data anarchy,” he said, adding that robust data is a prerequisite for economic development.