Expect sharp revision in GDP data

Written by Saikat Neogi | Updated: Aug 30 2012, 13:52pm hrs
Ahead of the first quarter gross domestic product data for FY13, which will be released on Friday, the Central Statistical Organisation has revised the quarterly numbers from 2007-08 to 2009-10. The revision comes at the time when the organisation is facing flak over IIP data showing dismal capital goods output while April-June 2012 corporate results of the same sector showed robust growth. Sharp revisions in IIP and GDP data have put a question mark on various policy decisions that have been taken based on these data, a point which has been underlined even by the Reserve Bank of India in the past and the Prime Ministers Economic Advisory Council recently.

For instance, except for the fourth quarter of 2007-08, the year-on-year GDP growth rate of the three quarters has been revised upwards and even the yearly growth for the year has been revised from 9% to 9.3%. The data for the first quarter of 2007-08 has been revised from 9.2% to 9.7%, for the second quarter from 9% to 9.5%, and for the third quarter from 9.3% to 9%. The upward swing is because of the revision in the data for manufacturingfrom 10% to 12.7% in the first quarter, 8.2% to 10.5% in the second quarter, 8.6% to 9.9% in the third quarter, and 6.3% to 8.4% in the fourth quarter.

Similarly, for 2008-09, the first quarter growth rate has been revised upwards from 7.8% to 9.8%, and for the second quarter from 7.5% to 8.5%. But for the next two quarters the growth rate has been revised downwardsfrom 6.1% to 5.8% in the third quarter and from 5.8% to 3.5% in the fourth quarter. The sharp downward revision in the fourth quarter data was because of revision in the manufacturing growth rate from 0.6% to minus 5.2%, clearly reflecting the impact of the global economic slowdown after the collapse of Lehman Brothers. Similar revision is seen in financing, insurance, real estate and business services. However, the yearly GDP growth rate for 2008-09 remains unchanged at 6.7%.

So, while the quarterly and annual data for 2010-11 and 2011-12 has not been revised as of now, one can expect sharp revisions on Friday, especially in the manufacturing growth as the data for the IIP is being revised frequently for the past six months.