Double deflation method and growth of manufacturing: a comment

Abstract

This comment points out an erroneous assumption in the calculations and central argument of Rajakumar and Shetty ("Gross Value Added: Why Not the Double Deflation Method for Estimation?," EPW, 15 August 2015) that reverses almost all their inferences and conclusions. If construction and service input prices are also considered in the construction of the input price deflators, the double deflation method may further raise the manufacturing real income rather than depressing it. Conditions under which single or double deflation can better approximate the Index of Industrial Production growth rate are also discussed.