It appears that India faked its GDP growth data...
India Economists’ Embarrassing Confession: They Don’t Know What GDP Is - India Real Time - WSJ
India’s radically revised gross domestic product data have apparently left economists dazed and confused because they are uncharacteristically silent about what growth was last quarter.
India is scheduled to announce GDP figures for the quarter ended Dec. 31 on Monday but instead of the regular rush of forecasts, economists seem to have created a cartel of silence, choosing not to make predictions using India’s new methodology.
Last week India surprised all the experts by recalculating GDP growth for the fiscal year ended March. Using a new calculation method, India’s economy expanded 6.9% that year, well above the 4.7% growth the country had announced earlier.
“The revision was massive,” said Siddhartha Sanyal, India economist at Barclays. “We don’t know what the GDP was in the previous quarter, so how do we estimate what is going to happen?”
The change happened because the government brought forward the base year used in GDP calculations by seven years to fiscal 2012. It also switched from using production costs to market prices.
While the headline growth figure shot up with the new calculations, the absolute GDP figure was basically the same as it was before, making it hard for economists to figure out exactly where the new-found growth came from. Meanwhile, the government didn’t give the revised quarterly data or new calculations for this year.
“We are completely blind at the moment,” said Saugata Bhattacharya, chief economist at Axis Bank.
While the new numbers suggest that last year the economy was rebounding strongly, some economists are still skeptical. Most other indicators that year suggested growth was sputtering, they said.
“I am not convinced that there is (such) good news,” said Glenn Levine, an economist at Moody’s Analytics. “If it’s true that the economy is growing close to 7%, then that suggests there isn’t much slack in the economy.”
That’s something economists are finding hard to digest given other indicators such as industrial production have pointed to weakness.
With a lot of questions about the new data still remaining unanswered, economists are only estimating growth for last quarter based on the old method even though the government won’t be announcing those numbers anymore.
Forecasts of eight economists surveyed by The Wall Street Journal using the now-outdated method range between 5.0% and 5.5%, compared with the 5.3% expansion in the September quarter.
While few will venture a guess on what numbers will be announced Monday, “the broader picture is that the economy is improving,” said Axis Bank’s Mr. Bhattacharya.
follow @WSJIndia
India Economists’ Embarrassing Confession: They Don’t Know What GDP Is - India Real Time - WSJ
India’s radically revised gross domestic product data have apparently left economists dazed and confused because they are uncharacteristically silent about what growth was last quarter.
India is scheduled to announce GDP figures for the quarter ended Dec. 31 on Monday but instead of the regular rush of forecasts, economists seem to have created a cartel of silence, choosing not to make predictions using India’s new methodology.
Last week India surprised all the experts by recalculating GDP growth for the fiscal year ended March. Using a new calculation method, India’s economy expanded 6.9% that year, well above the 4.7% growth the country had announced earlier.
“The revision was massive,” said Siddhartha Sanyal, India economist at Barclays. “We don’t know what the GDP was in the previous quarter, so how do we estimate what is going to happen?”
The change happened because the government brought forward the base year used in GDP calculations by seven years to fiscal 2012. It also switched from using production costs to market prices.
While the headline growth figure shot up with the new calculations, the absolute GDP figure was basically the same as it was before, making it hard for economists to figure out exactly where the new-found growth came from. Meanwhile, the government didn’t give the revised quarterly data or new calculations for this year.
“We are completely blind at the moment,” said Saugata Bhattacharya, chief economist at Axis Bank.
While the new numbers suggest that last year the economy was rebounding strongly, some economists are still skeptical. Most other indicators that year suggested growth was sputtering, they said.
“I am not convinced that there is (such) good news,” said Glenn Levine, an economist at Moody’s Analytics. “If it’s true that the economy is growing close to 7%, then that suggests there isn’t much slack in the economy.”
That’s something economists are finding hard to digest given other indicators such as industrial production have pointed to weakness.
With a lot of questions about the new data still remaining unanswered, economists are only estimating growth for last quarter based on the old method even though the government won’t be announcing those numbers anymore.
Forecasts of eight economists surveyed by The Wall Street Journal using the now-outdated method range between 5.0% and 5.5%, compared with the 5.3% expansion in the September quarter.
While few will venture a guess on what numbers will be announced Monday, “the broader picture is that the economy is improving,” said Axis Bank’s Mr. Bhattacharya.
follow @WSJIndia
