From the Vivek Kaul Letter (India) – A few days after the revised GDP numbers were released, in early February 2015, Arvind Subramanian, the Chief Economic Adviser, Ministry of Finance, gave an interview to the Business Standard, questioning the revised economic growth numbers.
In this interview Subramanian said: “This is mystifying because these numbers, especially the acceleration in 2013-14, are at odds with other features of the macro economy. The year 2013-14 was a crisis year – capital flowed out, interest rates were tightened and there was consolidation – and it is difficult to understand how an economy’s growth could be so high and accelerate so much under such circumstances.”
He further said: “Also, look at the other data -in 2013-14, import of goods apparently declined 10 per cent; this, even after accounting for the squeeze on gold imports, is high. Typically, growth booms are accompanied by surges in import, not declines. Similarly, data show real gross capital formation declined in 2012-13 and grew at a modest three per cent in 2013-14. It is not usual for growth to accelerate so rapidly in this situation.”