India's GDP growth rate for the July-September quarter has been reported at a robust 7.6 percent, surpassing economists' expectations of 6.8 per cent and prompting the Finance Ministry to reconsider its growth forecast for 2023-24.
Chief Economic Adviser (CEA) V Anantha Nageswaran, in a press briefing on Wednesday, suggested that the actual growth rate could be even higher. Here are the five key highlights from his address:
Revisiting the GDP Forecast
Nageswaran indicated that the Finance Ministry will reassess its current GDP growth forecast of 6.5 percent for 2023-24 in light of the recent data.
He emphasised the need to work out the numbers thoroughly before making any definitive statements.
"We got this 7.6 percent number about an hour or so ago. So we need to work out the numbers and see what kind of upside it imparts to the overall estimate for the year," he said.
Increased Confidence in the Forecast
The CEA expressed increased confidence in the 6.5 percent growth forecast for FY24, stating that the latest data makes them "much more comfortable" with this projection.
"At the moment, all it means is that we are much more comfortable with 6.5 percent than before," Nageswaran said.
Upcoming Monthly Economic Review
Nageswaran mentioned that the Finance Ministry's next Monthly Economic Review, typically released in the third week of each month, will provide more detailed insights and possibly revised growth forecasts based on the new data.
"When we presented the Economic Survey, we said 6.5 percent, but the risks were tilted to the downside. And sometime in May-June, we did upgrade it by saying that risks were balanced. Now we have got two quarters of numbers. We will do our homework and tell you in the next Monthly Economic Review how we see things," Nageswaran said.
Potential Underestimation of Growth
Highlighting a unique perspective, the CEA suggested that there might be an underestimation by the Statistics Ministry in measuring India's growth.
He pointed to the historically high tax buoyancy as an indicator that the economy's momentum and dynamism could be stronger than what current measurements show.
"It is a theoretical possibility that when you have a tax buoyancy which is as high as 1.9 or close to 2, which is historically unprecedented, then it is quite possible that we are not measuring the economy's underlying momentum and activity and dynamism as we should be," the chief economic adviser said.
Asserting the Validity of Growth Numbers
Addressing skepticism about the growth figures, Nageswaran stressed that these numbers are based on real, tangible data, including company cash flow statements.
He urged the consideration of the possibility that the economy's actual growth could be surpassing the current measurements.
"Contrary to some opinions that the economy's growth numbers are being overstated… These are real numbers. These are cash flow statements put out by companies... It behooves us to consider the possibility that the economy could be actually growing far better than what we are actually measuring," he said.
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