Pace and direction

Indian GDP and growth estimates are messy and show no signs of being cleared up. JP Morgan’s Sajjid Chinoy has a lucid note on the 2Q GDP growth numbers. From Gross Value Added (GVA) to GDP growth, statisticians’ keystrokes appear to have done an over-smoothing of the growth in net indirect taxes (Indirect taxes less subsidies) so much so that GDP growth at 7% y/y is lower than GVA growth of 7.1%. Based on what happened in the budget, one would have expected the opposite. Indirect taxes went up and subsidies were reduced slightly. It is a ‘seat of the pants’ economy with no one knowing which way it is heading. How to make policy in this environment?

The worlds’ two large economies – India and China – have poor statistical data and capricious methods that those two aspects alone should deny them a seat at the high table. Other countries in the West manipulate their data too but at least, they know what and why are they are doing so and by how much. There is a method in their madness but not in ours.

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