Economists and statisticians have expressed concern over massive revisions of GDP data, starting FY23, made by the statistics ministry on Friday. They see a need to re-look at the way estimates for GDP are computed, as high data revisions have serious implications for policy-making.

“Substantial revisions of past data make forecasting more challenging, but still the overall picture and analysis remains unchanged, which is that the economy is on a stable footing,” noted Madan Sabnavis, chief economist, Bank of Baroda. “From a policy perspective, we are already on the right path and need not have to change direction. The focus will continue to be on tackling the tariff issue which is paramount on the agenda,” he added.

The growth in FY24 has been revised sharply up by 100 basis points (bps) to 9.2%, and the FY23 figure by 60 bps 7.6%.

The Q2FY25 growth was revised to 5.6% (from 5.4%), and Q1FY25 to 6.5% (from 6.7%). For FY24, the quarterly growth rates were revised as follows: Q1 (to 9.7% from 8.2%), Q2 (to 9.3% from 8.1%) Q3 (to 9.5% from 8.6%), Q4 (to 8.4% from 7.6%).

Pronab Sen, former chief statistician of India, explained that the statistics ministry might have got access to the full Ministry of Corporate Affairs’ (MCA) dataset of ‘unlisted companies’, in the year after the provisional estimates of GDP is released (in May).

“The provisional GDP estimates are based on listed companies data. This suggests that unlisted companies have done much better than the listed companies,” said Sen. He, however, added that the revisions are “huge, and one of the largest revisions seen in recent years.”

Sakshi Gupta, principal economist, HDFC Bank said that the upward revisions in FY24 GDP prints have come in from the ‘manufacturing’ numbers, where low deflators played a role in boosting growth numbers. “The 8.2% print for FY24 (earlier growth estimate) was influenced by statistical factors. Perhaps, that’s getting amplified,” said Gupta. Manufacturing growth for FY24 has been revised upwards to 12.3% from 9.7% estimated earlier. Deflator for FY24 turned more negative largely due to the negative wholesale price inflation.

Sabnavis noted that the growth projections for Q3FY25 and FY25 need to be interpreted with care as the growth numbers for FY23 have been upped “substantially”.