IMF Backs India’s Updated GDP Methodology, Calls Revision ‘Welcome Development’

Washington: The International Monetary Fund on Thursday said India’s updated GDP calculation methodology aligns with best practices and is entirely consistent with IMF’s advice.

Calling India’s GDP base revision a “welcome development,” Krishna Srinivasan, Director of the IMF’s Asia and Pacific Department, told reporters in Bangkok that the updated methodology completely matches the advice provided by the IMF’s statistics department.

“These revisions to the methodology are entirely consistent with what the advice we’ve been giving them, including from our statistics department,” Srinivasan said.

He said India had also issued a note to explain the revisions to the GDP methodology.

“In terms of GDP numbers, what they have done is consistent with good practices. I would say there’s always room for improvement, but let’s recognise the good work done by MOSPI (Ministry of Statistics and Programme Implementation) for improving GDP statistics,” he said.

The IMF official said India faced the energy shock with strong fundamentals and has responded well to it, and that pressure on its exchange rate should not be read as a sign of economic failure.

The exchange rate is “a function of global interest rates, investor risk appetite, and oil prices”, he said, adding that the pressure on the exchange rate does not point to a real disconnect with growth.

The IMF’s Regional Economic Outlook for Asia and Pacific, released on Thursday, names India among the emerging economies that faced pressure on their currencies after the energy shock.

It said the pressure has partly eased over the past few months, and listed India among the economies that stepped into foreign exchange markets.

Last month, a political row broke out over the better-than-expected GDP growth figures — 7.8 per cent for the June quarter — released by the government, which were contested by former Finance Secretary S C Garg.

Garg claimed the GDP data was artificially boosted by compressing the previous year’s figures.

The former finance secretary’s claims were latched onto by the opposition parties, who questioned the integrity of the government’s GDP data.

Chief Economic Advisor V Anantha Nageshwaran termed Garg’s approach as “cherry-picking” of data.

He said the latest GDP figures were compiled using the financial year ending in March 2023 as the new base, and a change in methodology led to revisions to last year’s quarterly data.

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