Why India's strong GDP growth is raising eyebrows
India's unexpectedly strong economic growth sparked a debate after an ex-bureaucrat questioned whether the expansion was overstated and a former central bank chief asked why strong expansion had not shown up in jobs and investment. Shubham Batra reports.
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Why is India's strong GDP growth raising eyebrows?
The first quarter of the current fiscal in India, India's economy has grown at 7.8%.
It beat analysts' expectations.
The street was expecting roughly about 7.1%.
And it was also ahead of the central bank's projections, which were around 7%.
The biggest challenge that has come for this 7.8 number has come and why it has become
important because it came from a former finance secretary, a top ranking official in the government
itself.
What he has said is that India, what the ministry has done is they have shrunk the last year's
output or they have revised, there's a sharp downward revision in last year's output.
And therefore, India's GDP in this quarter looks much stronger.
Now, what is the problem here?
In February early this year, the Ministry of Statistics and Planning had revised the
base.
Now, what was happening earlier was we were using an outdated base to calculate the GDP
numbers.
The outdated base was 2011-12.
India did revise the base and the base that we now use is 2020-23.
Now, that is not taken into consideration by the former finance secretary and that has
sort of led to the confusion.
As far as the data is concerned, I don't see a statistical problem with the data.
On the second, the picture is much more complicated where you said that is it really being failed
on ground?
You see the data on one hand showing very strong figure, but on ground people feel that
the inflation is high.
But when you look at the data, the data suggests something else because just by the sheer population
that we have in India, right?
The consumption is going to grow year on year.
What we see is that the investment, the investment component, which had lagged for so many years,
that has finally started kicking in.
So, I wouldn't say that the data completely is disconnected from the ground.
But definitely, you know, if you ask an average consumer today, do you feel India is growing
at 7.8%?
They may not because of high inflation.