Facts and statistics: On the national income data released by the National Statistical Office

GDP numbers bring cheer in election year, and merit more scrutiny

The latest national income data released by the National Statistical Office (NSO) last week have generated (to cause something to exist) a fair amount of excitement (to make someone have strong feelings of happiness and enthusiasm) as well as bewilderment. While the markets have cheered the NSO’s estimate of a robust 8.4% year-on-year growth in real gross domestic product (GDP) in the October-December quarter, some economists (a person who studies or has a special knowledge of economics) have been hard pressed to reconcile the sharp differences of well over a 100 basis points between the official estimates and their projections (a calculation or guess about the future based on information that you have) that many of them had made. The release also posits that real GDP grew by 8.2% and 8.1%, respectively, in the first and second quarters of the current fiscal, 40 and 50 basis points quicker than it had estimated (roughly calculated or approximate) earlier. Full-year real GDP growth too is now forecast at 7.6%, 30 basis points faster than the 7.3% growth it had estimated as recently as in January. A factor behind the upgrades in the current fiscal’s income estimates is the NSO’s revisions to the estimates for 2021-22 and 2022-23. While the revisions to 2021-22 data have resulted in that year’s real GDP growth being raised by 60 basis points to 9.7%, a fallout is the consequent (happening as a result of something) scaling down of 2022-23’s GDP expansion to 7%, from the earlier estimate of 7.2%. Given that revisions to a previous year’s data automatically (without human control; independently) alter the year-on-year pace of growth, the base effect is a crucial (extremely important or necessary) element that has to be factored in while gauging (to calculate an amount, especially by using a measuring device) the import of the headline number.

In real productive sectors of the economy, third-quarter gross value added (GVA) growth slowed to 6.5%, from an upwardly revised 7.7% pace in the preceding July-September period, as output in the key rural agriculture, livestock, forestry and fishing sector contracted 0.8% year-on-year and growth momentum (the quality that keeps an event developing or making progress after it has started) slowed sequentially (in a way that follows a particular order) across five of the other seven sectors that contribute to the GVA. That the GVA growth rate is a full 190 basis points slower than the GDP’s 8.4% pace is primarily because net indirect taxes are estimated to have surged 32% year-on-year in the last quarter, largely as a result of subsidy payouts, including on fertilizers, being drastically (in a way that is severe and sudden or has very noticeable effects) lower. To that extent, the GVA growth rate presents a truer picture of the health of the economy. And even on the demand or expenditure side, the data on private consumption spending and government consumption (the act of using, eating, or drinking something) expenditure in the third quarter reveal a lack of traction (the fact of an idea, product, etc. becoming popular or being accepted). While private spending grew by a mere 3.5% year-on-year, government consumption spending actually shrank 3.2%. With the general election set to be announced any day now, the headlines around the NSO data serve as a poll-eve talking point. But there must be a sober analysis of the real state of the economy that draws on multiple statistical (a collection of numerical facts or measurements, as about people, business conditions, or weather) sets.

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