Pssst. The IMF team is here on a two week visit to study India’s data collection process. Why? We have’em running scared, that’s why. The poor devils cannot fathom how a country that was stuck at the jinxed sub-5% growth rate with “macroeconomic vulnerabilities” could suddenly show a 7.4% growth for FY15, and expect 7.9% for FY16, give or fashionably take 20 bps. It’s not only them; the UPA too is scowling how they couldn’t have seen it before. According to the new series, the GDP growth rate for FY14, the election year no less, was also a healthy 6.9%. Ouch! And to think they lost the election because they apparently didn’t perform on growth!
The IMF is now seriously scared. They have realized that the developing economies now have got hold of the Elder Wand with which they can create magical growth rates. It’s simple, really. The idea is not to revise the base year of the GDP series, come what may. So you stick around like a leech to a base year for 9 or 10 years and so, new products and services that the economy is creating are automatically not included in the GDP calculations. You get depressed GDP calculations and the west eyes you with pity and tries to give you the encouraging boost by calling you hearty and false sounding names like emerging markets and sunrise economies and stuff, when well, you in fact have already emerged, the sun has risen and the bric-mason is laughing all the way to the bank.
The rest, as they say, is economics. After around 10 years, you suddenly wake up from the GDP hibernation and declare in that tone of stellar surprise, “Omigosh, has it really been 10 years? Well, time to change the series.” But careful, here. For, while the tone of surprise is sufficiently necessary, it is not necessarily sufficient, you see. Because these multilateral and especially ratings agencies have got the habit of asking those nasty awkward questions like why you didn’t have this brilliant idea before. So, think about answers. If the party in power has changed, great! It was THEY who were lazy, right? Add to it useful words like policy paralysis, and you are through! Hmm, however, not every country has such wonderful luck. In that case, build up your case. Tell’em how no year in the past 10 years has been “normal” enough to be classified as the base year. After all, the US sub-prime crisis affected the EMEs too, making revision almost impossible. Twas the US, not US! That’s the line to take. That’ll make them go on the defensive and not ask too many deep questions. And if even that doesn’t work, there’s always good ole climate change. Climate change has positively made all years in the past 5 abnormal.. And please, do NOT call it bin badal barsaat, for heaven’s sake. The El Nino and the La Nina. That should do the trick.
And then, revise. That’s it. With a straight face. Further, “benchmark the series for ease of international comparisons”…oh, just use the GDP at market prices rather than factor cost. Increase the sample size for “statistical robustness.” The Sub-Saharan Africans discovered the trick a couple of years ago; Ghana posting a 19% growth rate was creating palpitations in a recessionary world, thanks to changing base after about 18 years, when the Nigerians announced wickedly that their base was as old as 25 years. With Africa revising, Modi Sarkar cannot be behind. Today’s visit to China has been fast-tracked so that we can crow about this before the Chinese cotton on and decide to put in their own revision. Won’t be surprised if, before long, the world is clocking global growth rates of about 7%.
The IMF is stumped. You see, there is a new contagious crisis episode in the globe. Its the GDP revision crisis.