Finance Minister Nirmala Sitharaman on Wednesday clarified that the Economic Survey and the Union Budget project different rates of nominal GDP growth for 2019-20 because they use different base figures. However, she added that the two rates were consistent with each other.
While the Union Budget presented on July 5 projected a nominal GDP growth of 12% for financial year 2019-20, the Economic Survey pegged this figure at 11%. Opposition leaders in the Lok Sabha highlighted this discrepancy and demanded why there were so many different numbers being issued by the government.
The Opposition also walked out of the lower House during Ms. Sitharaman’s reply to the concerns over the Budget, protesting the Budget’s announcement of a hike in the duties and cess rates on petrol and diesel.
“The growth rate in the nominal GDP for 2019-20 in the Budget document has been projected at 12% over the advance nominal GDP estimates of ₹1,88,40,731 crore for 2018-19,” Ms. Sitharaman said during her reply. “The advance estimates of 2018-19 were released on Jan. 7, 2019.”
“The growth rate of nominal GDP for 2019-20 in the Economic Survey has been projected at 11% over the provisional nominal GDP estimates of ₹1,90,10,164 crore of 2018-19,” the Finance Minister added. “The Provisional Estimates of 2018-19 were released on May 31, 2019.
“Both the projections are consistent with each other as each of them project the nominal GDP of ₹2,11,00,607 crore for 2019-20,” she said, adding that the government holds the Economic Survey, which is produced by the Chief Economic Advisor, at a “respectful arm’s distance.”
Her explanation for the lower GDP base being used in the Budget was that this was the same number used in the Interim Budget presented in February.
“A lower GDP base of 2018-19 has been used in the Budget document as the same GDP base was used in the interim Budget presented in February 2019,” Ms. Sitharaman said. “Using the same GDP base ensures comparability from Budget to Budget, interim Budget to regular Budget, and this Budget to last year’s Budget.” She said that using the same base ensures comparability of the deficit ratios used in the July Budget and the interim Budget.