The Indian economy apparently grew by an astonishing 20 percent in the most recent quarter for which data is available (Q1, 2021-22). In a tweet, the Ministry of Finance proclaimed:
Q1:2021-22 data reaffirms Government’s prediction of an imminent V-shaped recovery made last year at this time. Increase of 20.1% in GDP – despite the intense second wave (of COVID-19) in the months of April-May – highlights the continued economic recovery.
This was accompanied by the following figure.
Really? Despite the savage impact of the second COVID-19 wave that killed hundreds of thousands within the space of a short period and decimated small business? This should provoke one to invoke the old adage ‘lies, damn lies, and statistics’. It is always possible to use numbers to bolster a weak argument.
Consider the following admittedly contrived example. Take three periods (each representing a quarter). Set period 1 as 100. Now assume there is a massive economic contraction so that the level of GDP in the second period is 75. Assume that a ‘V-shaped’ recovery takes place so that the GDP level in period 3 is 90. One could argue that this is not yet a ‘real’ recovery because the level of GDP in period 3 is still below period 1.
This contrived example offers a good representation of what happened to the Indian economy. Today, (2021-22) Indian GDP is lower than it was in 2018-19 – see Table 1 below. Hence, celebrating a 20 percent quarterly growth rate conceals more than it reveals.
Mahesh Vyas, who heads the highly cited Centre for Monitoring the Indian Economy (CMIE), aptly observes:
India can … choose to celebrate the rapid recovery from the excruciating pain of lockdowns or bemoan the steady erosion of well-being and growth potential…it is now becoming increasingly clear that the recovery … will not get India’s real GDP to where it was before the shock even by the end of March 2022.
Source: scroll.in which in turn is extracted from other media reports (Hindustan Times, Indian Express)