Modi's India
Another Asian Giant With Inflated GDP Stats?

The most recent Nobel Prize winner for economics, Princeton’s Angus Deaton, says that India’s official growth figures may not be as accurate as many might assume:

“The national accounts are showing, you know, a huge increase in the amount that people have, year, upon year, upon year, and we’re just not picking it up in the household surveys,” Mr. Deaton said. That’s “a very, very serious gap and I think not enough is being done to address that,” he said.

Mr. Deaton, a professor at Princeton, said the differences raise doubts about the accuracy of growth numbers. “I’m sure some of that growth is exaggerated,” Mr. Deaton said. “I’ve no idea how much, it might be just a point or two. It might be a lot more than that.”

“One of the things you worry about with statistics is that growth is so much a flag under which recent Indian governments have flown,” Mr. Deaton said. “They are very much tied to that measure of success. That makes it very difficult for accurate data-keeping.”

Even if there isn’t an attempt to bump up the numbers for political reasons, measuring economic activity in a country as big, and as diverse as India, with levels of development ranging from world class software firms to indentured slave laborers making bricks out of mud, is a task that, realistically speaking, is probably beyond the capacity of the Indian government—or indeed of any government on the planet.

And furthermore, none of this means that official figures are worthless. As with China’s unreliable books, there are still useful things that can be discerned from by looking at them. But it’s all too easy to forget, as we look at a table of nice crisp statistics, that reality is usually much more complicated than the paperwork says it is.

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