Do it yourself

India’s growth 2QFY26 surprised positively with 8.2% real GDP growth print, up from 5.6% a year ago. On the face of it, this is an impressive print—broad-based, investment-driven, and supported by a healthy services backbone, and steady private consumption; though, a few familiar questions on data quality, especially after the IMF’s recent downgrade of India’s statistical credibility to Category C , cast some cloud on sustainability.   A broad-based GDP beat As per the official release real GDP for Q2FY26 is estimated at ₹ 48.63 lakh crore, growing 8.2% YoY, while nominal GDP rose 8.7%. Growth drivers ·          Manufacturing (9.1%) and Construction (7.2%) carried the secondary sector, delivering an aggregate 8.1% GVA growth . ·          Tertiary sector GVA expanded 9.2%, led by: Financial, real estate & professional services: 10.2% Public administration & defence: 9.7% ...

  While the 7.4% GDP growth number for 4QFY25, and claims of continuing strong growth momentum in April 2025 are encouraging, the RBI assessment of FY26 growth and aggressive policy stance raise some doubts. A careful analysis of the GDP data released by the NSO also leaves some doubts about the consistency and sustainability of the 4QFY25 growth numbers. Many economists have noted discrepancies and incongruencies in the data, as well as comparisons with other economic indicators and external analyses. For example, I found the following noteworthy. Discrepancy Between GDP and GVA Growth Rates In Q4 FY25, GDP growth is 7.4%, while GVA growth is 6.8%. The divergence between GDP and GVA growth rates is notable, as GDP includes net taxes (taxes minus subsidies), which can distort the picture of underlying economic activity captured by GVA. The gap suggests that tax revenues or subsidy adjustments may have inflated GDP growth relative to GVA. For instance, higher GST collections or redu...

The Indian economy has indubitably shown brilliant resilience and sustained the base growth rate of ~6%. In the current year FY26 also the real GDP is expected to grow in the range of 6.3% to 6.6% (vs 6.5% in FY25). It is expected that the tax incentive offered in the budget for FY26 may support urban consumption demand, that has been lagging for the past couple of years, while the rural demand has shown some pick-up. Good monsoon may further stimulate rural demand. Benign inflation and below potential growth trajectory shall keep the RBI on the monetary easing path. Rates may fall further and liquidity may remain supportive. Continued focus on capacity building by the government may however continue to remain the mainstay of the growth. The global environment remains challenging with trade related uncertainties and geopolitical tensions persisting. However, a resolution of trade and geopolitical conflicts could provide strong impetus. In my view, 6% (+/- 50bps) may now be the ba...

The latest Periodic Labor Force Survey (PLFS), released on 16 August 2024 by the National Statistical office (NSO), provides some useful insights into the current employment conditions in the country. The following are some of the key observations from the Survey report. The Good ·          The employment conditions have improved during 1QFY25. The WPR-U improved for all ages and both genders. The Youth WPR-U improved from 39.3% (1QFY24) to 40.8% (1QFY25). For all workers, WPR-U improved 38.4% to 39.3% during this period. ·          The LFPR-U male workers improved from 57.2% in (1QFY24) to 58.9% in (1QFY25) for youth (15-29yrs) and from 73.5% to 74.7% for all workers above 15yrs of age. ·          Self-employed female workers increased in urban areas from 39.2% to 40% while the number of self-employed male workers in urban areas increased from 39.5% to 40%. ...

  Recently, the growth in per capita GDP of India has been in the news. The government statistics claim that per capita income of India has almost doubled in the past nine years. This claim has generated intense discussion over the economic performance of the incumbent government; especially relative to the previous UPA government (2004-2014). Without getting into a political argument and keeping the statistics aside for a while; I would like the popular debate to take the following into consideration: ·           The last census of India was done in 2011. Therefore all “per capita” data points are using an estimated number of the population. There is a possibility that the actual number could be different from the estimates. ·           In the past twelve years there have been significant changes in the socio-economic and demographic structure of the country. The youth population has increase...

The union budget presented on 1 st   February 2022 was widely hailed as growth supportive. Almost all experts and commentators opined that ~14.5% in budget capex would catalyze a new wave of infrastructure and industrial development and growth in the country. The finance minister highlighted the following four pillars of growth as the basis of her budget proposals. 1.    Accelerated development of world class infrastructure (PM Gati Shakti) 2.    Using digital capabilities for delivering inclusive development 3.    Productivity Enhancement & Investment, Sunrise Opportunities, Energy Transition, and Climate Action 4.    Crowding in private investment through enabling policy environment Most strategists projected high growth for the infrastructure and capital goods sectors in the wake of great emphasis placed on capex by the finance minister. However, collective wisdom of the markets did not concur wi...

Last week, the National Statistical Office (NSO) released first advance estimates of the National Income for FY23. These estimates are important because the budget estimates for FY24 would be based on these estimates. The finance ministry will use these estimates to project the GDP, savings, tax revenue, expenditure and allocations for various sectors of the economy. Some key highlights of the data released by NSO could be listed as follows: FY23 real growth (2011-12 prices) GDP (at 2011-12 prices) may increase by 7% to against 8.7% in FY22. This estimate is marginally higher than the RBI’s latest estimate of 6.8%. Per capita GDP may increase by 5.8% to Rs1,13,967, in FY23, against a growth of 7.6% in FY22. Per capita private consumption may be Rs65,237, a growth of 6.6% over FY22. FY23 Nominal Growth (current prices) GDP may increase by 15.4% to US$3.3trn, against 19.5% growth in FY22. Per capita GDP may grow by 14.2% to Rs1,97,468 (US$2394), against a growth of 18.4% in FY22. Per cap...

  State of the economy The National Statistical Office (NSO) recently issued the first advance estimates (FAE) of GDP for FY22. This event is considered important, because these estimates are essentially used as input for preparing budget estimates for the next year (in this case FY23). The estimates are derived by extrapolating the previous year (in this case FY21) final estimates using the performance of sector indices in the first 7 to 9 months of the current financial year. These estimates may be subject to substantial revision in case of a material event that may impact the economic performance during the fourth quarter of the current financial year, e.g., lockdown during March of FY20. FY22e Real GDP to grow 9.2% NSO has estimated FY22 GDP to grow at 9.2% (-7.3% in FY21), lower than the recent estimates of RBI (9.5%). Although the FAE accounts for slower growth (~5.6%) in 2HFY22 against 13.7% in 1HFY22, these estimates may not have fully factored in the impact of rece...