Cracking the GDP puzzle: How data revisions helped the govt show a better number

Doubts surrounding India’s GDP number just refuse to die down. With every new GDP number there is a chain of suspicions and denials Doubts surrounding India’s GDP number just refuse to die down. Importantly, capital formation as suggested by Q3 and Q4 data show a positive growth which contradicts the decline in government capital outlay and continued delayed in private capex,” they have said. “High frequency real activity data released since demonetisation suggest that consumption and services were hit after demonetisation because they are more cash-intensive,” Nomura said. “First, the inability of official statistics to capture the negative growth effects on the unorganised sectors; second, positive base effects created by the 0.8 pp upward revision in fourth quarter 2015 GDP growth; and third, companies may have showed their cash in hand as sales.” The brokerage feels the official GDP numbers “are significantly underestimating the growth impact of demonetisation”.