India’s GDP Growth May Exceed Forecasts Following Economic Data Overhaul
India’s economy could be growing faster than previously thought. This Friday, the government will introduce a new framework for calculating economic output. This update highlights how the world’s most populous nation remains resilient despite global trade challenges.
As part of this change, the government is shifting the Gross Domestic Product (GDP) base year from 2011-12 to 2022-23. They will also release new advance estimates for the current financial year ending in March.
New Projections Show Stronger Growth
According to a survey of 14 economists by Bloomberg News, the updated data may show the economy expanded by 7.6% this financial year. This is higher than the government’s previous projection of 7.4% made in January under the old system.
This GDP overhaul is part of a larger project to modernize India’s economic data. Earlier this month, the government also updated its inflation data to better reflect how people spend money today.
Modernizing the Economic Map
Updating the “base year” changes the weight given to different industries to match how the economy has evolved over the last decade. In the new series, fast-growing sectors like the digital economy and gig work will likely have more influence. In contrast, traditional sectors like agriculture and informal manufacturing may have a smaller impact on the final numbers.
“The new GDP series will be critical for future policy decisions,” says Teresa John, an economist at Nirmal Bang Securities. She noted that while the Reserve Bank of India (RBI) wants to support growth, its next moves will depend heavily on the data from this new series.
India’s Global Standing
Experts are also watching these new calculations to see when India might overtake Japan as the world’s fourth-largest economy. While the Indian rupee’s drop against the dollar held the economy back last year, this data revision could significantly boost the total GDP. A similar update in 2015 increased India’s estimated GDP by approximately $120 billion.
Trade Relations and Economic Reforms
The Indian government remains optimistic about growth for this year and next, even with recent trade tensions. Although a trade deal with the US was reached earlier this month, the outlook is currently uncertain following a Supreme Court ruling regarding US tariffs.
To protect the economy from these global disruptions, the government introduced major reforms last year, including changes to consumption taxes. Friday’s data will provide the first full look at how the economy performed between October and December following those tax updates.
Expectations for the Final Quarter
A Bloomberg survey of 34 economists suggests that growth for the October to December quarter could hit 7.6% under the new base year. Radhika Piplani, an economist at Motilal Oswal, believes the results could be even better. She expects growth for that period to reach as high as 8.5%, up from the 8.2% reported in the previous quarter.
Also Read : Telangana Government Considers Salary Deductions for Neglecting Elderly Parents
