India growth figures baffle economists

But there was confusion regarding the statistics after the way in which the gross domestic product (GDP) figure was calculated was changed.

Economists warned the figures needed to be treated with caution.

Growth for the previous three months was also revised up sharply to 8.2% from an earlier figure of 5.3%.

And India’s statistics ministry revised up its forecast for annual economic growth to 7.4% for the year to the end of March.

That compared with a previous forecast of 6.9% using the new formula, and 4.7% before the revised formula was introduced.

The country’s new way of calculating GDP has baffled analysts since its release last month.

India said the new formula is closer to international standards. But analysts say the new data does not correlate with other economic indicators, including industrial and factory production.

Some economists have said the latest figures should be “taken with a pinch of salt” and expressed scepticism over the figures at a time when India’s central bank has been talking about a slowdown.

Jyotinder Kaul, principal economist at HDFC Bank, also 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 said.

“My view is that the economy is certainly making its way up, but none of the other indicators suggest that we have completely made our way out of the ditches.”

India was believed to be in the midst of the worst economic slowdown since the 1980s with below 5% growth, a level that was considered to be too low to generate jobs for millions of young people.

Indian Prime Minister Narendra Modi won last year’s general elections on a promise to reform and revive the economy and attract much-needed foreign investment.

Optimism has grown under the Prime Minister Modi, but the country is yet to see any of the big bang reforms he promised to revive the economy.



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