"GDP numbers not fudged, criticism stupid; India's market size overrated, California alone matches its economy": Surjit Bhalla

Rejecting claims that India's GDP figures are unreliable, Bhalla said the criticism lacks merit. He also dismissed the notion that India's sheer size automatically makes it a large consumer market, arguing that the economy of the US state of California is comparable in size to India's despite being a single state.

In an interview with ANI, Bhalla, a former part-time member of Prime Minister Narendra Modi's Economic Advisory Council, said there was no credible evidence to support allegations that India's GDP figures were being manipulated.

"I think they're talking garbage," Bhalla said while responding to critics who question India's official GDP data.

Defending the country's statistical system, he said, "We have one of the best statistical systems in the world and in particular on GDP. Now, that is not to say that we are perfect... We've just had two major innovations... So, you know, the larger question is, do we fudge? And there is no evidence."

Bhalla said he had previously examined the issue in response to similar criticisms and found the methodology used by some critics to be flawed.

"In my study, I addressed this on Arvind Subramaniam back in 2019, that his method of assessing whether you're fudging the GDP... according to his method, Germany was the one fudging the most," he said.

According to Bhalla, repeated allegations of manipulated GDP data divert attention from genuine reforms required in India's statistical system.

"It is precisely because of criticism like, that governments get away easy because it's so easy to suggest that's wrong... We don't get reforms because of it," he said, while pointing to recent improvements in the Industrial Production Index and GDP estimation methodology.

Drawing comparisons with neighbouring countries, Bhalla said India's record on revising GDP estimates has actually been far more conservative.

"I took Bangladesh, Pakistan, Sri Lanka and India... Our cumulative upgrading of GDP was 8 per cent over 50 years. What was the cumulative GDP upgrading of Bangladesh? Sixty-plus per cent. And Sri Lanka, 35 per cent," he said.

Summing up his position, Bhalla remarked, "GDP numbers being fudged is the stupidest criticism in my view."

Bhalla also challenged the commonly held belief that India's $4 trillion economy automatically makes it one of the world's largest consumer markets.

"This idea that we have a large market... India's GDP is 4 trillion. California's GDP is 4 trillion. So we are not, let me just make it explicitly clear, we are not a large market. We are a very small market," he said.

Explaining his argument, Bhalla said India's aggregate GDP masks the country's relatively low per capita incomes.

"Because in this 4 trillion... there are lots of poor people, lower middle-class people, etc. So that comes into the GDP. But it's not a signifier of wealth, of status, income status," he said.

Bhalla argued that policymakers and industry must abandon complacency based on the assumption that India's domestic market alone can sustain growth and instead focus on creating globally competitive industries.

He contrasted India with countries such as Vietnam and Bangladesh, saying they do not assume they are large markets but instead provide strong incentives to attract foreign investment.

"Does Vietnam think they are a big market? No. Does Vietnam provide excess benefits to FDI? Yes. Does Bangladesh provide excess benefits to FDI? Yes. Do we provide? No, we want to tax them. That's our attitude," Bhalla said.

While stressing that India has made remarkable economic progress over the past three decades, Bhalla maintained that the country could achieve much faster growth if it pursued more ambitious reforms.

"We've done absolutely brilliantly well over the last 35 years... I'm very proud of the fact we've done incredibly well. And I'm very disappointed with the fact that we can do better," he said. (ANI)