Yesterday, we had written about the controversy over GDP numbers. What has happened since is even more bizarre. Now the government has issue new numbers. All within some 24 hours. The government has revised consumption numbers quite dramatically, claiming the earlier low numbers were simply a result of a calculation error.
The size of revision is dramatic. The consumption size GDP growth estimate is now 10%, compared to 3.7% earlier. Pvt consumption growth is now 3.7% compared to 0.3%, while the government expenditure growth is now 14.2% compared to -0.6% earlier.
Contrary to making us feel better about government data, this makes us feel even more uncomfortable. Yesterday, we had believed the explanation behind the low consumption numbers were systemically less efficient calculation methods. We understand quarterly data on GDP has started coming out only in the last 1-2 years, so we thought, the government still has to get its act right on the number collection mechanism.
So our point was: just ignore these consumption numbers, focus on the supply side numbers, where the data is being collected for several years, so more reliable.
Do we feel better now, given that the government claims it was an error and not systemic issues? No. Our point is this: how do we know the current numbers are not simply something pulled out of a hat?
That is what it seems to us. Reacting to the front page story in The Economic Times, it appears to us, that the finance ministry may have simply directed someone at the CSO to come out with palatable numbers forthwith.
We have for long said Indian WPI numbers are incorrect. The Wisdomsmith guage for WPI shows far different numbers (and much higher) to official numbers.
Indian government needs to get some more method into its statistics. Since the last 12 months, official data is becoming increasingly suspect.
Disclosure: No position