It is not uncommon to see that when an individual comes under severe criticism and fails to respond professionally to his critiques, he loses rationality and indulges into personal attacks. A case in hand is our Finance Minister who resorted to personal attack on his critics, when he was exposed for grossly manipulating key economic statistics.
In a recent pre-budget seminar organised by one of the local television channels, I exposed the minister for forcing the senior staff of the Pakistan Bureau of Statistics (PBS) to get his 'desired' economic growth number. The inside story of 'forced 'economic growth also appeared in an English daily on May 21, 2016. Instead of responding professionally, the finance minister indulged in personal attack by calling me a 'Spin Doctor'. In the past, he also described one of his critics as 'pseudo economist'.
In this article I intend to show that the GDP growth number is grossly inflated for the year 2015-16. This is not the first time that the minister forced the PBS to get the desired number. In fact, the real GDP growth for the last three years has been inflated to misguide the people of Pakistan.
The readers would know that for the last three years, we have been experiencing three types of economic growth. One is the 'asking rate of growth', asked by the finance minister. Second is the 'delivered rate of growth', delivered by the PBS and the third one is the growth estimated by independent economists. In the year 2015-16, we have added a fourth rate of growth, that is, 'forced rate of growth,' forced by the finance minister.
The 'forced' rate of growth is 4.7 percent for the outgoing fiscal year2015-16 as against a growth of 3.1 percent estimated by the independent economists. Based on the performance of cotton crop (-34 percent), rice crop (-2.7%), maize crop (-0.3 %) and wheat crop (0.0 %), I had estimated the real GDP growth to be in the range of 3.0-3.5 percent for the year 2015-16. Dr Hafiz Pasha and his team in Social Policy Development Centre (SPDC) estimated the growth at 3.1 percent, which falls in my forecast range.
Why we believe that the growth as reported by the government (4.7%) for the year 2015-16 is grossly exaggerated? Firstly, the finance minister wanted to state in his budget speech that "We have achieved the highest growth rate in the last eight years". He did the same thing in his budget speech of 2014-15 fiscal year when he had stated that "We have achieved the highest growth rate in 2013-14 in six years". For this to say, he manipulated the growth statistics of 2011-12 which were brought down from 4.4 percent to 3.8 percent and as such became lower than 2013-14 (4.0%).
Secondly, growth rate in 2015-16 has been overstated in ten out of 18 sectors of the GDP, as reported in the SPDC report. Whenever agriculture registered a negative growth (like this year), real GDP never registered a growth that exceeded 4 percent in the last four decades. How come with a negative growth in agriculture, the real GDP growth accelerated to 4.7 percent? The estimate of 3.1 percent by independent economists, therefore is consistent with historical facts (See table 1).
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Government's Number SPDC Number
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Agriculture - 0.2% - 2.0%
Industry 6.8% 5.5%
Services 5.7% 4.1%
GDP 4.7% 3.1%
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Thirdly, the very fact that the GDP estimates are manipulated can be seen from the facts that provisional real GDP for the year 2014-15 is identically equal to the revised estimates for 2014-15 (See Table 2). The readers would know that the provisional GDP estimates are based on 6 to 8 months' information while the revised estimates are based on 12 months' information. How come these estimates are identical to each other? Similarly, the revised and final estimates of 2013-14 are also identical. Such a perfect estimate can never be found elsewhere in the world. This can only happen in our finance minister's world.
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Years Provisional Revised Final Result
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2013-14 - 10,211.4 10,217.1 100.1%
2014-15 10,644.3 10,629.7 - 99.9%
2015-16 11,130.0 - - -
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