Working Paper: Indian Growth is Not Overestimated: Mr. Subramanian You Got it Wrong

No: WP-2019-019

AUTHOR: Ashima Goyal, Abhishek Kumar

TITLE: Indian Growth is Not Overestimated: Mr. Subramanian You Got it Wrong

Abstract :
Subramanian (2019) argues that indicators like growth in export, import and private credit can be used
to predict economic growth across countries. He finds these indicators were able to predict Indian
growth before 2011 but fail to do so after the GDP estimation methodology was changed in 2011. This
implies Indian growth was overestimated by 2.5% per annum post 2011. But on removing various flaws
in his data and procedures used, we find these indicators underestimate growth before 2011 too. The
most reasonable specification suggests that the underestimation before 2011 was higher than
underestimation post 2011. Moreover, growth in a large number of countries is found to be either
overestimated or underestimated, based on these indicators. His empirical design is therefore flawed.
These regressions cannot be used for predicting growth or for concluding Indian growth is
overestimated or for pointing to problems in the estimation methodology.

Keywords: Indian growth; overestimation; growth indicators; prediction regressions; impact
JEL Code: O47, O53