Experts doubt growth forecast

Say government may have to revise economic data in future

While India has overtaken China to become the fastest growing economy in the world, a section of the market analysts have turned a little sceptical about the India’s growth numbers.

In its response to the latest GDP growth data released by the Central Statistical Organisation ( CSO), Ambit Capital said that GDP growth data is being overestimated by the CSO and will eventually be revised downwards as the first, second and third estimates are published.

“The new GDP series and the information that it is conveying, not just in terms of levels but also in terms of the direction, seems very counter- intuitive. This is simply because all our qualitative and quantitative data checks suggest that GDP growth decisively decelerated in FY16 vs FY15 whilst the GDP data is suggesting that growth accelerated in FY16. Our own proprietary tool called India’s Keqiang Index suggests that economic momentum has been decelerating systematically from Q1FY16 to Q3FY16,” said Ritika Mankar Mukherjee, economist and associate VP, Ambit Capital.

The data released on Monday showed India’s GDP grew by 7.3 per cent during the OctoberDecember quarter and is expected to post a growth of 7.6 per cent for fiscal year 2015- 16. Last year, the government adopted a new methodology for calculating GDP numbers, which better captures the value addition made in the supply chain.

“Overall data suggests moderate recovery is underway, though there have been sharp revisions in GDP internals in previous quarters. The robust growth in certain components such as manufacturing is not consistent with several other indicators like poor exports, not- so robust private consumption and weak credit growth among others,” said analysts at Edelweiss Securities Ltd.