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India’s growth rate overestimated by 2.5%, says study by former chief economic advisor

Published

7 years ago

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Wealth Indian currency

[vc_row][vc_column][vc_column_text]A new study by none less than India’s former Chief Economic Advisor Arvind Subramanian may have punctured India’s much vaunted status as world’s fastest growing economy.

Titled India’s GDP Mis-estimation: Likelihood, Magnitudes, Mechanisms, and Implications, Subramanian’s working paper for the Center for International Development at Harvard University, US, is critical of Indian statisticians and the way India’s GDP growth has been estimated after 2011-12.

It says the expansion was overestimated by as much as 2.5 per cent between 2011 and 2017, that is, during UPA-2 and Prime Minister Narendra Modi’s first term. Rather than growing at about 7% a year in that period, growth was about 4.5%.However, it doesn’t break this down by year.

But this means India’s claim of being the world’s fastest-growing major economy may not have been true.

“The Indian policy automobile has been navigated with a faulty, possibly broken, speedometer,” says Arvind Subramanian, who was Chief Economic Adviser for Prime Minister Narendra Modi’s government between 2014 and 2018. He asserts that the overestimation is not political.

“My new research suggests that post-global financial crisis, the heady narrative of a guns-blazing India – that statisticians led us to believe – may have to cede to a more realistic one of an economy growing solidly but not spectacularly,” Subramanian wrote in The Indian Express, attributing the overestimation to “methodological changes”.

The previous Congress-led government changed the methodology in calculating gross domestic product in 2012. One of the key adjustments was a shift to financial accounts-based data compiled by the Ministry of Corporate Affairs, from volume-based data previously. This made GDP estimates more sensitive to price changes, in a period of lower oil prices, according to the research paper. Rather than deflate input values by input prices, the new methodology deflated these values by output prices, which could have overstated manufacturing growth.

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Subramanian carried out an experiment, one that many other economists have also been doing for India: he made an index of other data sources that could reflect what is happening in the actual economy, such as electricity consumption, two-wheeler sales, index of industrial production and so on. None of these were figures that came from the Central Statistical Office, which compiles the GDP statistics.

Subramanian’s index found that these indicators tend to move closely in step with the GDP number between 2001-’02 and 2011-’12. But from 2011-’12 to 2016-’17, there are huge gaps between them. The paper uses various methods, including indicators from India and other countries, to test mis-estimation in growth, all of which confirm the belief that GDP growth was over-estimated.

Subramanian insists that the paper is only the start, and much more research needs to be done. But, in looking at the data, he does offer one explanation for why the new methodology of calculating GDP might have thrown out bad data.

Based on the experiment, Subramanian finds that before 2011, the official estimates of manufacturing move along with other indicators, like the index of industrial production. But under the new methodology, this connection is completely broken.

The reasons for this are more complicated but, to put it simply, the paper suggests that the new GDP methodology does not properly take into account how changes in global oil prices (and possibly other “input” commodities) might affect actual figures. Ultimately, this means that the new GDP methodology has a completely flawed understanding of manufacturing numbers.

But this only explains about a 1 percentage point of the overall 2.5 percentage point over-estimation. More research is needed to understand what else is going wrong.

Subramanian points out that this isn’t just a matter of denting India’s reputation. Bad data would also affect policymaking For example, the Reserve Bank of India might have cut interest rates much earlier if it was known that GDP growth was that much lower, and the government might have moved much quicker to resolve the banking crisis or agricultural concerns.

According to the former top economic adviser, the popular narrative has been one of “jobless growth”, hinting at a disconnect between fundamental dynamism and key outcomes. “In reality,weak job growth and acute financial sector stress may have simply stemmed from modest GDP growth. Going forward, there must be reform urgency stemming from the new knowledge that growth has been tepid, not torrid; And from recognising that growth of 4.5 per cent will make the government’s laudable inclusion agenda difficult to sustain fiscally.”

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Dr Subramanian explains that when he was working with the government, he had grappled with conflicting data and “raised doubts frequently” with the government. “But the time and space afforded by being outside government were necessary to undertake months of very detailed research, including subjecting it to careful scrutiny and cross-checking by numerous colleagues, to generate robust evidence,” he says.

The paper has three recommendations for what India needs to do:

India must “restore growth as a key policy objective”.

India must “restore the reputational damage suffered to data generation,” not only by giving statutory independence to the National Statistical Commission (which currently has no independent members) but also by hiring people with “stellar technical and personal reputations”.

The entire methodology and implementation for GDP estimation must be revisited by an independent task force, comprising both national and international experts, with impeccable technical credentials and demonstrable stature.

On the other hand, the politically appointed NITI Aayog was seen as interfering with India’s statistical operations. Recently, word has emerged that the BJP is thinking about a new law to merge the main bodies that work on statistics, potentially undermining their independence.

 

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Xbox announces 3,200 layoffs as Asha Sharma outlines major restructuring plan

Xbox has announced plans to lay off 3,200 employees over the next year while introducing a major restructuring programme that includes management changes, studio restructuring and cost-cutting measures.

Published

3 weeks ago

on

July 7, 2026

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XBOX layoff

Xbox has announced plans to reduce its workforce by 3,200 employees, representing around 20 per cent of its total staff, over the coming year as part of a broader restructuring programme linked to Microsoft’s increased investment in artificial intelligence.

According to an email shared with employees by Asha Sharma, the company will begin the process immediately, with 1,600 employees leaving on Monday, while the remaining job reductions will take place during FY27. The company also plans to divest four gaming studios and is preparing to separate from another.

Business reset planned amid financial challenges

In her message to employees, Sharma said the company’s current financial position required significant changes, stating that Xbox’s business was operating at substantially lower margins than comparable platform and publishing companies.

She said the layoffs were not a reflection of employees’ commitment or abilities but were part of a wider effort to strengthen the company’s long-term business.

The workforce reduction comes as Microsoft continues implementing AI-focused cost-cutting measures across its operations. Overall, the technology company is reportedly cutting 4,800 jobs, with Xbox accounting for the largest share.

Sharma also described the gaming sector as experiencing one of its most challenging hardware periods and said the company needed to “reset Xbox” to improve its future performance.

Company to streamline operations and reduce management layers

As part of the restructuring strategy, Xbox plans to simplify its organisational structure, revise its content portfolio and improve platform operations.

According to Sharma, the company currently loses 64 cents for every dollar invested annually, making operational efficiency a key priority.

She said Xbox would increasingly support independent game creators by offering open development tools and broader audience access.

The restructuring will also see Mojang and King report directly to Sharma. She said both studios have evolved into major gaming platforms with large monthly active player bases and will play a central role in Xbox’s future strategy.

To improve decision-making, the company plans to significantly reduce its management hierarchy. Sharma said some departments currently have as many as 14 management layers, which slow down operations. Xbox aims to reduce this to no more than five layers, and in some cases, only three.

The company will also reduce vendor spending by 50 per cent as part of its cost-saving measures.

Helen Chiang promoted to Chief Operating Officer

Alongside the restructuring announcement, Sharma confirmed the promotion of Helen Chiang to the newly created position of Chief Operating Officer.

Chiang will oversee profit and loss responsibilities across Xbox’s content, hardware, platform and services divisions while reporting directly to Sharma.

According to Sharma, the new operating structure is intended to improve investment decisions, strengthen accountability and better integrate the company’s various business units.

Despite the ongoing restructuring and job cuts, Sharma said Xbox remains committed to long-term growth and plans to continue investing heavily in the business, while placing greater emphasis on disciplined spending and strategic priorities.

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Bank holiday today: Are banks open or closed on June 29? Here’s what RBI calendar says

Banks in Himachal Pradesh and Mizoram will remain closed on June 29, 2026, due to regional holidays, while banking operations will continue normally in most other states.

Published

4 weeks ago

on

June 29, 2026

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Bank Holidays

As June comes to an end, many customers are wondering whether banks across the country are open on June 29, 2026. According to the Reserve Bank of India’s (RBI) holiday calendar, bank operations will not be affected nationwide, but branches in some states will remain closed due to local holidays.

Banks closed in these states on June 29

Banks will remain shut in Himachal Pradesh on Monday, June 29, on account of Sant Guru Kabir Jayanti. In addition, bank branches in Mizoram will remain closed to observe Remna Ni, a regional public holiday.

However, bank branches in most other states and Union Territories are expected to function normally as June 29 is not a nationwide banking holiday.

Will online banking services remain available?

Even when physical branches remain closed, customers can continue using digital banking facilities. Services such as internet banking, mobile banking, UPI transactions, ATM withdrawals and cash deposits at ATMs will remain operational.

Customers planning to visit a bank branch are advised to check with their local branch beforehand, as holiday schedules may vary depending on the state and local observances.

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Union Budget 2026 highlights: Nirmala Sitharaman Raises Capex to Rs 12.2 Lakh Cr, West Bengal Gets Major Allocation

Finance Minister Nirmala Sitharaman is presenting the Union Budget 2026 in Parliament today. Follow this space for live updates, key announcements, and policy insights.

Published

6 months ago

on

February 1, 2026

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Finance Minister Nirmala Sitharaman arrives to present Union Budget 2026

Finance Minister Nirmala Sitharaman will shortly present the Union Budget 2026 in the Lok Sabha, marking her ninth consecutive Budget. The annual financial statement is expected to outline the government’s policy priorities, reform agenda and spending plans for the coming year. Stay tuned for live updates, key announcements and immediate reactions as the Budget speech unfolds.

Finance Minister Nirmala Sitharaman tabled her ninth Union Budget today, beginning her speech at 11 am.

Nirmala Sitharaman is set to present her ninth Union Budget today, with the finance minister scheduled to begin her speech at 11 am.

Budget 2026 live updates: Presenting the Union Budget for 2026–27, Finance Minister Nirmala Sitharaman said the occasion coincided with Magh Purnima and the birth anniversary of Guru Ravidas. She noted that over the past 12 years, India’s economic journey has been defined by stability, fiscal discipline, sustained growth and moderate inflation.

The budgeted fiscal deficit for fiscal 2026 is estimated at 4.4 per cent of gross domestic product (GDP)

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20 new waterways over next 5 years to be connected

7 high-speed corridors on rail

High-level committee on banking for next phase of Viksit Bharat

Capital expenditure hike of to ₹12.2 lakh crore in Budget 2026, with West Bengal receiving a significant share of allocations.

Mahatma Gandhi Gram Swaraj Initiative aimed at boosting the khadi, handloom, and handicrafts sectors.

High-speed rail corridors: Mumbai-Pune, Pune-Bengaluru, Hyderabad-Bengaluru, Chennai-Bengaluru, Delhi-Varanasi, Varanasi-Siliguri, Pune-Hyderabad

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