Posted by : Kapil Sunday, February 2, 2014

India recently revised its GDP growth percentage for FY13 to 4.5% . This happened because the size of the GDP measured for FY12 was raised higher and on this higher base the previous estimate for FY13 thus meant lower growth.

India revises its estimates for GDP three times before settling for a final number and FY13 number could still therefore turn out to be higher. Anyhow, the first reaction to this has been that short term India's economy seems to be in a bigger hold. 5% growth estimate was anyways lowest in a decade. 4.5% growth sounds like a dooms day scenario.

Curiously, what this also means is that whatever is the GDP estimate for FY14, the growth number would be compared against FY13 and on a relative bases the growth number would look rosier than before. Eg. a 4.9% growth number would signal a moderate turnaround in fortunes (vs 4.5%) whereas earlier (vs 5%) it would have looked like a continuing downtrend in growth rates.

I am therefore left wondering if any of this is an exercise in deception (self or otherwise) but is likely to have a positive impact on markets, as GDP growth numbers are announced in the coming quarters. Macro watchers should then cheer and increase their weight-age for investments in India 

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