The revision of GDP (Goods Domestic Product) growth numbers of the first two quarters has baffled many economists as they raise concerns over the quality of data put out by the government. Revision of the quarterly numbers in the middle of the year is unusual and has probably happened for the first time, says former chief statistician of India, Pronab Sen. He says that usually, the quarterly numbers are revised when the full-year provisional numbers are announced, and that it's not common for the quarterly numbers to be revised in the middle of the year, that too so sharply.
The National Statistical Office (NSO) has revised the first quarter GDP growth numbers from 5 per cent to 5.6 per cent and the second quarter numbers from 4.5 per cent to 5.1 per cent -- the growth rate of the both quarters revised upwards 60 basis points. In the third quarter, the GDP growth was 4.7 per cent. The finance ministry officials attribute the upward revision to a lower base effect after the 2018-19 GDP growth rate was revised downward from 6.8 per cent to 6.1 per cent.
However, Sudipto Mundle, Economist and Professor at NIPFP (National Institute of Public Finance and Policy (NIPFP), and who was also chairman of the National Statistical Commission, says the quarterly GDP numbers can't be revised based on revision of the full-year numbers. Mundle adds that he's also puzzled and believes it's probably the first time such a revision in quarterly numbers has been done.
Many economists also believe though such frequent revisions are unusual, it could also be one-off adjustments. However, they say the 'revised' story is scarier as it shows the slowdown has not bottomed out yet, as expected by many. Siddhartha Sanyal, Chief Economist and Head of Research, Bandhan Bank, says the interpretation of the economic activity trend has been complicated with the large-scale revision in the official GDP data numbers.
He argues that since more downward revisions (of GDP growth number) had been pronounced during 2018-19 than 2019-20, the growth figures for the first and second quarters this year have been revised upwards. He cautions that looking only at the upward revision in the GDP numbers in the first half of FY20 can lead to misinterpretation and a false sense of "optimism".
The NSO has revised the first two quarters GDP numbers upwards, while the full-year estimates remain unchanged at 5 per cent. This means the fourth quarter numbers would be around 4.6 per cent, and that the downward trend will continue dashing hopes of a revival, at least in the current financial year.