India’s economy is expected to grow at 7.4 percent this fiscal year, reflecting a strengthening recovery and changes in the way it calculates gross domestic product.
The growth rate would also compare favorably with that of China, its giant neighbor to the north, although officials are playing down any comparison, the Wall Street Journal reported Tuesday.
“There is no comparison,” said Ashish Kumar, director general of the Central Statistics Office, given China’s economy is several times larger than India’s.
“We are not here in a beauty contest.”
If India does outpace its neighbor, it would mark a comeback for the South Asian nation, whose economy had until recently appeared to have lost its shine amid corruption scandals and gaping trade and budget deficits.
For the final three months of 2014, the third quarter of India’s fiscal year, gross domestic product grew 7.5 percent, the statistics ministry said, buoyed by increased government spending and financial services.
But the the revised calculations that underpin the growth figures are causing a mix of confusion and jubilation.
Shubhada Rao, chief economist at Mumbai-based Yes Bank , said the revised data “do not add up in terms of the extent of improvement” in GDP.
Last month, the statistics ministry said it was updating the base year used as the reference point for measuring price changes, as well as incorporating newer, more-comprehensive data into its GDP calculations, which aim to measure the country’s total economic output.
The ministry also shifted its focus to GDP computed at market price, not at factor cost, as its main indicator of economic expansion.
Market-price GDP gauges activity by adding up consumers’ and firms’ spending, whereas factor-cost GDP tabulates producers’ costs.
The first growth estimates produced using the new methodology showed growth in the previous fiscal year, which ended in March, well above what was originally announced — 6.9 percent instead of 4.7 percent.
The size of the economy, however, was relatively unchanged.
– Contact us at [email protected]