Economists sceptical as India posts robust quarterly growth figures

Analysts have cast doubt on figures released for latest quarter, after new method of calculating GDP imposed

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The Independent Online

The Indian economy appears to be recovering after posting robust quarterly growth figures today, but analysts have warned that the data may not be trustworthy.

India had been mired in its worst period of growth since the 1980s but claimed to have grown by 7.5 per cent between October and December, compared with the same period last year, according to official figures.

The changes in how Indian authorities calculate the nation’s GDP have baffled analysts since its release last month.

An earlier figure showing growth for the previous three months at 5.3 per cent was revised up to 8.2 per cent under the new system.

Additionally, India’s statistics ministry revised its forecast for annual economic growth for the year to March up to 7.4 per cent. A previous forecast predicted 4.7 per cent before the new formula predicted 6.9 per cent.

India has claimed that the new formula is closer to international standards, taking in market costs instead of the more widely accepted factor costs to measure GDP, but many analysts remain unconvinced.

Writing in the Indian Express, Surjit Bhalla, chairman of Oxus Investments and a former World Bank economist, asked: “Why question the surge in GDP growth in 2013/14?

“Because the CSO revision do not pass a basic smell test,” he claimed.

His views are backed by principal economist at HDFC Bank Jyotinder Kaul, who questioned the “credibility” of the numbers.

“There is clearly the need to look at the credibility associated with these numbers. Nothing on the ground has substantially changed to show that we are out of the trenches," he told the BBC.

India’s Prime Minister Narendra Modi won last year’s election on a platform of fixing the economy and attracting foreign investment after the country’s economic growth shrunk to less than five per cent.

Additional reporting by Reuters