India Today news anchor Rajdeep Sardesai, who has a rich history of facing humiliation on live television, had to confront a similarly embarrassing situation on Wednesday after former Chief Economic Adviser to the Government of India KV Subramanian schooled him for cherry-picking specific data sets to portray India’s macroeconomic situation in a negative shade.
On Wednesday, Rajdeep Sardesai hosted former CEA and economist Dr KV Subramanian on his show to discuss the Indian macroeconomic situation amidst the ongoing global economic crisis that emanated from the Ukraine-Russia war.
Discussing the issue of rising inflation in the last few weeks, Rajdeep Sardesai claimed that the inflation rates have skyrocketed in the previous 13 months and asked whether it was due to global factors or if something was wrong with the policies of the government. However, instead of citing the Consumer Price Index data, the global benchmark index to measure inflation, Rajdeep Sardesai put out the Wholesale Price Index data to fearmonger about the price rise.
However, former CEA Dr Subrmanian was quick to politely correct the controversial news anchor saying it was incorrect to cite WPI data to suggest that the inflation was high in the country. Citing the data, Dr Subramanian said that the CPI is very much controlled in India compared to advanced economies. He also pointed out how CPI was at around 6 per cent in December, compared to 7.5 per cent at present, an increase that is not that substantial compared to the advanced economies.
Dr Subramanian also noted that the inflation rate in the United States is at a 40-year-high of 8.5 per cent, which traditionally has 2 per cent inflation. He also put out similar facts pertaining to the inflation rates in advanced economies such as the United Kingdom, where inflation is at a 30-year-high and in Germany, where the rates have spiked to a 26-year high.
According to the former CEA, the expansionary monetary and fiscal policy in these economies post-Covid pandemic was one of the major reasons for the high inflation, which added to the ongoing Russia-Ukraine crisis. He suggested that such global factors have been majorly responsible for the rise in the inflation rates, contrary to the claims put out by Rajdeep Sardesai that the inflation spike is due to the local factors and policies of the Modi government.
Dr Subramanian clarified to the viewers saying that the retail inflation is basically in food and energy, especially in pulses and edible oils. He suggested that the factors such as a ban on the export of palm oil by Indonesia and the supply side glut in the wheat market due to the war in Ukraine, a major producer of wheat, as the causes responsible for the sudden spike in retail inflation, which is measured through CPI in the country.
He repeatedly stressed that the global factors are causing the rise in price values of certain commodities as against the perception portrayed by Rajdeep Sardesai that it is more intrinsic. However, Rajdeep Sardesai continued to pin the blame on the government for the inflation rates spike, leaving the economist infuriated.
“I have done interviews with you over the last several years; you tend to focus only on the negatives even when there are many positives. The current inflation is primarily due to global factors,” quipped Subramanian as he stressed the fact that India was the only country in the world that was successfully managing the supply-side shock. The economist also stressed that there are global factors over which India has no control.
As Rajdeep Sardesai kept persisting that macroeconomic fundamentals were in bad shape and demanded the host to provide some good news about the economic growth, Dr Subramanian put out data to show how the economic situation in the country during the UPA rule had deteriorated compared to the strong fundamentals during the Modi era.
“During the global financial crisis, Rupee had depreciated by 56 per cent, retail inflation was in double digits for over 18 months, the fiscal deficit was 2.5 times more than the peer economies, the Current Account Deficit was at 6 per cent, and we were in fragile five. In contrast, what have we delivered is a fiscal deficit at 90 per cent of the peer economies and a Current Account Surplus. So how much good news do I need to give you so that you stop portraying in a negative manner in the last six-seven years?” Dr KV Subramanian schooled Rajdeep Sardesai.
The former CEA also cautioned the viewers about the negative portrayal of the Indian economic situation and added that the prices of commodities have eased up in the last few days and added that the global factors contributing to the higher inflation would eventually start to ease out, giving some relief.
Yet again, Rajdeep Sardesai picked up selective data on foreign exchange reserves to suggest that there was a decline in the reserves in the last few months. Responding to cherry-picking of the data, Dr Subramanian once again schooled Rajdeep Sardesai, asking him to focus on the fact that the foreign exchange reserves are at a historic high.
The former Chief Economic Advisor also assured that the macro-economy has done really well in the recent weeks and added that these are external shocks, when they ease-out, the situation will be better.
