Thus, if you spent Rs 100 on inputs and sold the output at Rs 120, value addition is Rs 20.
If the next year you spent only Rs 95 and sold at the same price, the growth rate will go up.
Indian GDP data barely covers half the transactions or level of economic activity in the country.
The other half, or perhaps 60 per cent, is in the so-called informal sector, about which whatever is known is mostly wild guesswork.
But while for Wall Street there was a clear and specific reason – income, wealth and livelihood, in India it was a case of ‘monkey see, monkey do’.
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Thus, while in the US, where there was real money at stake, they improved their data collection, in India we went with what we had.But it is the claim, and not the exhortation, that has caught the world’s attention. Not surprisingly India’s economists are honking like startled geese.It is like when the American singer Madonna when she posed in the nude. At the eye of the storm is not the issue but Mr Subramanian.The method was tarka-vitarka – argument and counter-argument – which had but one purpose: vanquishing your rival’s point of view by debate.”He went on to explain how the Brahmins, who had a near-complete monopoly on knowledge, busied themselves with increasingly esoteric questions about the cosmos, epistemology, teleology and suchlike.“It was useless knowledge from society’s point of view and left us in a weakened state.”I am recalling this conversation -- which I have summarised hugely -- because of the research paper the former Chief Economic Adviser to the Finance Ministry, Arvind Subramanian, has written for Harvard University.If you think this is complex, try this: GDP at market prices excludes subsidies, which means it is net government revenue that you are concerned with.The more rapidly this revenue grows, the faster GDP will grow.In it, he says two things: One, that India’s GDP growth rate was massively over-estimated between 2011-17 and, two that this calls for a thorough overhaul of the Indian statistical system.On the latter, everyone is agreed and indeed that is why the Indian Statistical Commission was set up about a decade ago. Its path has been strewn with administrative difficulties and turf wars within the small ecosystem of Indian statistics.Mr Subramanian, Mr Sen told The Hindu, was not comparing like with like.In truth Here’s a hard fact: Indian GDP data barely covers half the transactions or level of economic activity in the country.