The nominal GDP growth projection of 11 per cent in the Budget of 2016-17 was quite a “reasonable” estimate, said Jayant Sinha, Minister of State for Finance.

He was speaking at the 4th annual conclave of the Indian Private Equity and Venture Capital Association (IVCA) in the Capital on Thursday.

Sinha’s remarks are significant as several economy watchers have raised eyebrows over the government pegging the nominal GDP growth projection for 2016-17 at 11 per cent when the actual for current fiscal is only 8.6 per cent. For 2015-16, the Modi government had in last year’s Budget pegged the nominal GDP growth at 11.5 per cent.

“Nominal GDP this year was low and GDP deflator has been negative. This was a one time event. It reflects a collapse in prices of number of commodities like oil which came down from $100 per barrel to $35. This is all rates of change. We expect the delta that led to negative GDP deflator will not occur in 2016-17,” said Sinha.

The 11 per cent nominal GDP growth is a very reasonable number if one were to factor in GDP deflator returning to 2-3 per cent this fiscal, he said.

GDP numbers Responding to the critics who doubt India’s new GDP numbers, Sinha reassured that the Central Statistics Office (CSO) is an independent professional body and they follow global best practices.

“We may have questions about quality of data, methodologies etc. All the data are those in public domain. There may be some adjustments. There is no mal-intent at all. The government has no involvement in the production or processing of the data. The CSO is following global best practices,” he said.

One has to remember that there is going to be a reset when the economy is transitioning from a nominal GDP growth of 15 per cent with inflation of 10 per cent to a scenario of economy growing at nominal GDP growth of eight per cent, but higher real GDP growth, Sinha added.

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