Narendra Modi Govt changes methodology of computing India's GDP, BJPee supporters Marathadi Saamiyaar and Vakavaka Pakapaka get confused

Taken at face value, India on Monday became the fastest growing major economy in the world after its statisticians changed the way they measure Asia's third-largest economy and showed it clocked faster growth than China in the December quarter.

It marks a dramatic turnaround for an economy that a fortnight ago was assumed to be struggling to gain momentum under Prime Minister Narendra Modi's reform-minded government. Prior to Modi's election last May, the economy had endured its weakest phase of growth since the 1980s.

The statistical recovery is in large measure due to changes both in the way authorities calculate gross domestic product (GDP) and the base year.

Under the new method, the economy expanded 7.5 percent year-on-year during the last quarter, higher than 7.3 percent growth recorded by China in the latest quarter.

New Delhi also revised up growth for the first half of fiscal 2014/15 to 7.4 percent from the 5.5 percent reported earlier and forecast the full-year GDP growth to accelerate to 7.4 percent from a revised 6.9 percent a year earlier.

The new estimate is sharply higher than the Reserve Bank of India's (RBI) growth projection of around 5.5 percent for the year under the old method.

The reading has left economists confounded as it is at odds with other indicators such as industrial production, trade and tax collection figures, which suggest the economy is still suffering from slack.

"The government has itself been saying that tax collections are slow due to a slowdown in the economy, but the other wing of the government is saying that GDP growth has been good," said A. Prasanna, economist at ICICI Securities Primary Dealership Ltd.

"That means either one part of the economy is not taxed or there is an issue with the data."

India now measures GDP by market prices instead of factor costs, to take into account gross value addition in goods and services as well as indirect taxes. The base year has been shifted to 2011/12 from 2004/05 earlier.

The government's statistics department says the new method is more in line with global practices and gives a better picture of economic activity.

But the statistical fog makes it harder for policymakers to assess the size of the fiscal and monetary aid required to help spur even faster growth needed to generate jobs for millions of young Indians entering the labour force.

http://in.reuters.com/article/2015/02/09/india-economy-gdp-idINKBN0LD1AI20150209

The above was a rejoinder to this:

https://such.forumotion.com/t32111-indian-economy-grows-at-7-3-in-2014-up-from-6-9-a-year-before