Finance Ministry dismisses criticism about ‘inflated’ GDP

In other words, growth as per the Income Approach was lower. Using the expenditure approach, it would have been higher than the 7.2% reported for FY23 and higher than the 9.1% reported for FY22,” the ministry said in a series of tweets on Friday.

So, a balancing figure – statistical discrepancy – is added to the expenditure approach estimate.

Responding to critics questioning the discrepancies in the 7.8 per cent GDP growth rate seen during April-June, the Finance Ministry on Friday said citing nominal GDP growth being lower than real GDP growth is a “new bogey being spread to discredit the GDP numbers and indicate that underlying economic activity is quite weak” and “both do not stand up to scrutiny”.

“India’s real GDP growth was 7.8% y/y (year on year) in Q1 FY24 (first Quarter of FY 2023-24). This is as per the Income or Production Approach. As per the expenditure approach, it would have been lower.

So, a balancing figure – statistical discrepancy – is added to the expenditure approach estimate. These discrepancies are both positive and negative. Over time, they wash out. In fact, in FY23 and FY22, the ‘statistical discrepancy’ was negative.

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