OFFICIALLY, the “growth in GDP during 2020-21 is estimated at -8.0 percent as compared to 4.0 percent in 2019-20”. Further, “GDP at Constant (2011 12) Prices in Q3 of 2020-21 is estimated” as 0.4 percent. This is stated in the press note on The Second Advance Es timates of National Income, 2020-21, released on February 26, 2021. The Q3 data is for October to December 2020.
The implication is that the economy has recovered from the recession in the first half of 2020-21 and is once again growing, even if marginally so. If this is true, then in the final quarter of 202021, the economy should recover further. But the issue is whether the economy will recover to its growth rate of 2019 anytime soon. The economy had already slowed down to 3.1 percent in the last quarter of 2019-20, just before the pandemic hit. This was a decline from 8 percent achieved eight quarters back. In brief, the economy was already facing headwinds before the pandemic hit it in March 2020.
If the economy had started to grow in Q3 of 2020-21, does it mean that it has not only weathered the pandemic and lockdown-induced problems but also largely overcome the pre-existing difficulties which had led to the sharp slowdown over two years? This question raises three possibilities. First, the pickup has automatically happened after a sharp decline in the economy. Second, it is the result of the policies put into place by the government. Finally, official growth data is incorrect given data and methodological deficiencies.
OFFICIAL DATA FLAWED
The government and the RBI use high-frequency data to estimate the quarterly growth in the economy and predict the advance annual growth. A perusal of the list of variables used to estimate the growth rates shows that most of them are from the organised sector and a few from the unorganised one.
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