Data review from last 3 years behind Q3 manufacturing decline: Chief Economic Advisor

New Delhi:

Chief economic adviser V Anantha Nageswaran said today that the performance of the manufacturing sector and the growth rate of private consumption expenditure in the December quarter of 2022-23 appear “depressed” due to the higher base.

According to V Anantha Nageswaran, the GDP growth base was too high due to the revision of the data from the past three years.

The National Statistical Office (NSO) on Tuesday revised GDP growth data for the past three years – 2019-20, 2020-21 and 2021-22 and also released its second preliminary GDP estimates for 2022-23.

While the growth rate for 2021-2022 has been revised up by 40 basis points from 8.7 percent to 9.1 percent, GDP for 2020-21 (year affected by COVID) has also been revised upwards to (-) 5.8 percent, of (-) 6.6 percent. Growth has also been adjusted upwards for 2019-2020 from 3.7 percent to 3.9 percent.

However, the second flash estimates for real GDP growth for 2022-2023 were maintained at 7 percent, as projected in the first flash estimates in January.

The data showed that manufacturing contracted by 1.1 percent in the October-December quarter and private consumer spending slowed to 2.1 percent.

According to V Anantha Nageswaran, without the revision of the data, which resulted in a higher base, the manufacturing sector would have shown a year-on-year increase of 3.8 percent and private consumption expenditure would have grown by 6 percent in October. -Quarter December.

“There is a lot of misunderstanding about the data released last night on GDP for Q3FY23 because it also included revisions to data from the previous three years… When one compares a data point that has had three or four revisions and another that is still called ‘pre-estimated’, one does not compare apples with apples but apples with oranges,” he said.

Regarding private consumption expenditure, which stands for money spent by individuals on goods and services for personal consumption, V Anantha Nageswaran said that the previous years’ data revision has brought the growth rate down from 6 percent to 2 percent in Q3 (October-December) from 2022-23.

“Even though one compares consumption to consumption, one compares the cumulative base effect of the first revision to 2021-22, the second revision to 2020-21 and the third revision to 2019-20, all of which now inflate the base period data and depress the growth rate for 2022-23.

“So basically one is comparing apples and oranges. When one set of data is revised to account for underlying data revisions, larger samples, etc., and the other is not, it’s not a like-for-like comparison,” said Nageswaran.

Regarding gross value added (GVA) of manufacturing, he said it would have grown 5.1 percent in fiscal year 2022-2023 based on Second Advance Estimates with no revised data.

However, after revision, it will grow by 0.6 percent in 2022-2023. That is a revision of 4.5 percentage points.

Similarly, manufacturing gross value added in Q3 FY23 would have grown at an annualized rate of 3.8 percent without revised data. After this revision, however, it contracted 1.1 percent year-on-year in Q3 FY23. That’s a 4.9 percentage point change, he said.

“The argument that the recovery has become more superficial makes no sense, as one does not make a fair comparison,” said the Chief Economic Advisor.

NSO data released on Tuesday showed India’s gross domestic product growth slowed to a three-quarter low of 4.4 percent in October-Decemberperiod mainly due to contraction in production and low private consumption expenditure.

The Indian economy had grown by 6.3 percent in the July-September quarter and by 13.2 percent in the April-June quarter.

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