India will on January 30 revise upwards its Gross Domestic Product (GDP) growth rate for 2011-12 to about 7 per cent from 6.2 per cent. Faulty data had earlier underestimated industrial output by about 7 per centage points, highly placed sources in Prime Minister Manmohan Singh’s Economic Advisory Council told The Hindu . “India has been overstating the slowdown in the economy; this correction will address that,” the sources said.
The sharp revision in official data for GDP growth assumes significance in the wake of severe criticism from the Opposition of the Government’s performance on economic management.
GDP data for a fiscal undergoes three rounds of revisions; the process takes three years. The Central Statistical Office’s (CSO) is scheduled to release the Second Revised Estimate for 2011-12 on January 30. The First Revised Estimate for 2011-12 was 6.2 per cent.
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The Second Revised Estimate will use the Annual Survey of Industries (ASI) findings in place of the Quick Estimates of Index of Industrial Production (IIP). The ASI data shows that industrial output in 2011-12 had grown by 23.6 per cent in nominal and about 15 to 16 per cent in real terms, the sources said. The IIP data had “significantly” underestimated real factory output growth for the year at 2.9 per cent.
ASI data is considered more comprehensive and accurate than IIP data. It comes with a lag of 20 months. In the interim, the government estimates industrial production using IIP data.
“The IIP has been consistently underestimating India’s industrial output but the magnitude of the problem has increased since 2005-06,” the sources said. “The accumulation of errors over the years has led to wider variations between the IIP and the ASI data in the last couple of years.”
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India had grown at a decade-low of 5 per cent in 2012-13, as per the Quick Estimates. Besides the Second Revised Estimates for 2011-12, the CSO is also expected to release the First Revised Estimates for 2012-13 on January 30.