‘Questioning CSO data is jumping the gun’

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me to rent a place and live there for 5-10 years. It was the people of the state who protested, and that’s how the government backed down,’’ he says. Not surprisingly then that in his speech at Modi’s rally, Sanajaoba reminded the Centre of the 1949 merger agreement by which the Kingdom of Manipur became a part of India. “The title of the customary head entrusted to the King of Manipur in the merger agreement signed before Manipur merged with India has become meaningless now. This is the main reason for the gradual loss of identity of the people of Manipur. Please make the office of the customary head truly meaningful and functional as defined in the merger agreement,’’ he said. existing methodology.” Sen is now India Director with International Growth Centre, a think tank that aims to promote sustainable growth.

T C A Anant, who is Chief Statistician now, replaced Sen in June 2010.

Economists believe that as data gets refined in coming months, it is likely that these numbers are revised.

“The economy would have got hurt. Anecdotal evidence suggests cement sales decreased, footfalls in restaurants dropped, and so did automobile sales. The first estimates of GDP do not capture the disruption. As more information becomes available, a downward revision is possible,” said D K Joshi, Chief Economist, CRISIL.

What’s added to the confusion are different scenarios painted by say, the manufacturing GDP data, and the index of industrial production. “The manufacturing GDP shows sharp growth whereas IIP during Aprildecember dipped 0.5 per cent,” he pointed out.

Many analysts do not take quarterly growth estimates quite seriously because of inadequate data with the CSO.

“Almost 45 per cent of the GDP is informal. The CSO uses different proxies to estimate GDP. For instance, sales tax collections is taken as a proxy for the trade sector. Here, if states post robust sales tax growth, the trade sector growth will reflect it. The CSO doesn’t get influenced by anyone. Yes, we should discuss how quarterly GDP data can be arrived at to make it more useful,” said Neelkanth Mishra, India equity strategist, Credit Suisse.

Some economists point to pent-up rural spending following a normal monsoon after two consecutive years of drought and advance spending and even blowing up of money before December 30, (the demonetisation deadline) by those who had cash, as reasons why consumption may not have been so adversely impacted as expected initially.

“Two things come to mind. People advanced spending. What they could have done over three-four months, they did it quickly. Second, many blew up money. Anecdotal reports suggest that people bought substantial quantities of gold, or even made high-value purchases,” said Sudipto Mundle, economist and member of the board of governors of NIPFP, an economic think tank.

“Also, there has been a shift from the informal to the formal. In truth, India’s GDP fell, but some people have been quick to jump the gun to say CSO is doing the bidding of North Block. They are wrong,” said Ajay Shah, Professor, NIPFP.

Like IGC’S Pronab Sen, L&T Finance Holdings’s Group Chief Economist Rupa Rege-nitsure also believes the impact of demonetisation on the unorganised sector and the agrarian and rural belt have not been captured.

“While the second advance estimates show GDP growing at 7.1 per cent, the Gross Value Added (GVA) has shown a loss of 110 basis points to 6.7 per cent this year compared with 7.8 per cent last year. There are several issues with GDP data. It is no more a credible number,” Rege-nitsure said.

Putting the third quarter estimates in perspective, Devendra Pant, Chief Economist, India Ratings & Research, said, that for two years rural economy was down. “With a good monsoon and lower inflation boosting purchasing power, it is likely people spent more during Q3. Government salary also saw upward revision. And not to forget, demonetisation happened after two major festivals. People spent not knowing demonetisation will be announced soon. These could be plausible reasons for the 7 per cent GDP growth estimate for October-december 2016,” he said.