On Monday, the government revised the Gross Domestic Product (GDP) growth for 2015-16 upwards to 7.6% as compared with revised estimate of 7.2% in the previous fiscal year, aided largely by the growth in the manufacturing sector.
A section of economists in India have raised doubts about the country's economic growth that was revised upwards to 7.6% while some others are claiming that the economic momentum has been decelerating systematically from the first quarter (2015-16) to third quarter.
On Monday, the government revised the Gross Domestic Product (GDP) growth for 2015-16 upwards to 7.6% as compared with revised estimate of 7.2% in the previous fiscal year, aided largely by the growth in the manufacturing sector.
The new projection has put the country ahead of China as the fastest growing major economy in the world. China's growth is pegged below 7% in the comparable period.
A cross section of economists is sceptical about the GDP growth figure pegged by the government.
Ritika Mankar Mukherjee, economist - associate vice-president, Ambit Capital, said 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 2015-16 as against the previous fiscal, whilst the GDP data is suggesting that growth accelerated in 2015-16. Our own proprietary tool called India's Keqiang Index suggests that the economic momentum has been decelerating systematically from the first quarter (2015-16) to third quarter," she said.
"We maintain our point of view 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," she said.
Aditi Nayar, senior economist, Icra Ltd, believes that the composition of GDP growth was unfavourable in the third quarter (July-September), with the considerable slowdown in investment growth and pickup in expansion of both private and government consumption expenditure.
Doubts about the accuracy of India's GDP growth figures have continued to surface a year after the government unveiled a new series to "capture value addition down the goods and services supply chain".
The revision, believe economists, has bumped up India's growth numbers sharply and put them at odds with other leading indicators of industrial activity, such as the Index of Industrial Production (IIP), which still shows weakness. At the ground level, say economists, the companies are still grappling with weak demand, high debt and low earnings.
According to a Reuters poll, economists expected that India would report GDP growth of 7.3% for the October-December quarter, under the new methodology. Though a tad slower than the previous quarter, it is much ahead of the 6.8% growth posted by China.
Ashish Kumar, who recently retired as the head of India's statistics office, told Reuters that the economists are using the wrong gauges to understand data that measures value addition.
"You have to understand that the new GDP data essentially captures efficiency," he told Reuters. "Comparing it with volume-based indicators would be a mistake."
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