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Manufacturing growth in India in recent years: Is it getting overstated in India’s new GDP series?

Bishwanath Goldar (Institute of Economic Growth, Delhi University, Delhi, India)

Indian Growth and Development Review

ISSN: 1753-8254

Article publication date: 14 November 2016

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Abstract

Purpose

Since the announcement of the new series of national accounts for India (with base 2011-12) in January 2015, there has been endless controversy over the new gross domestic product (GDP) growth numbers, particularly in respect of growth of Indian manufacturing. The purpose of this paper is to highlight certain policy issues concerning India’s system of national accounts, in the context of the methodological changes made in the new national accounts series, and to check the validity of the view held by some critics that the new series has significantly overstated the growth rate in real gross value added in manufacturing in recent years.

Design/methodology/approach

The paper presents a brief, selective review of the literature that has emerged on the new series of national accounts. A close look is taken at the available data on real gross value added growth in Indian manufacturing in conjunction with data on growth in India’s exports and in outstanding non-food commercial bank credit. Analysis of these data is undertaken with the help of a table and some graphs.

Findings

The paper finds that there is not enough basis to believe and argue that the GDP estimates in the new series of national accounts significantly overstate the true manufacturing sector growth in India.

Originality/value

Rates of manufacturing output growth in recent years indicated by the new series of national accounts for India are subjected to careful scrutiny by contrasting yearly growth rates in manufacturing output with those in India’s non-oil exports and in outstanding non-food commercial bank credit.

Keywords

Citation

Goldar, B. (2016), "Manufacturing growth in India in recent years: Is it getting overstated in India’s new GDP series?", Indian Growth and Development Review, Vol. 9 No. 2, pp. 102-113. https://doi.org/10.1108/IGDR-08-2016-0037

Publisher

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Emerald Group Publishing Limited

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