Govt to restate part of Q1 GDP, may revise it at mkt prices

After questions were raised on the GDP numbers announced yesterday, the government is in damage control mode.  It is likely to revise the GDP at market prices. Finance Minister Pranab Mukherjee says this revised figure will be made public soon.

"What the central statistics office (CSO) gives as a figure, gets corrected sometimes. There's no doubt in it because these are on the basis of random surveys. Therefore there are some errors here and there. The revised figure will be given. Some criticism has been made about the fact that the projection from the demand side is not matching and the growth from that has been projected and that will have to be addressed."

Former Chief Statistician of India, Pronab Sen said, "The estimates that we make from the production side are in fact very accurate so there is no issue with the 8.8% growth. The difference has actually arisen out of a statistical issue, which is that two different prices are used to get the constant figure. In the case of the production side number we use the WPI, in the case of the expenditure side we use the consumer price index. Now normally the difference between the two indices is about 2% points or so but in this particular quarter as well all know the difference was nearly 8% to 9% and that what's causing the problem."

Here is a verbatim transcript of CNBC-TV18's Siddharth Zarabi's comments. Also watch the accompanying video.

Officially, from the department that should be correcting and announcing the restated GDP at market prices number, there is no official confirmation so far. The change to yesterday's press release that we have spoken about has not come out so far.

What is this entire thing about? As we know, the difference between two sets of numbers was 5.1 percentage points. GDP at factor cost and GDP at market price is 8.8% and 3.7% respectively. This led to a lot of questions by the economists and in that regard we tried to get reactions from the government through the day.

The first reaction from the Chief Economic Advisor was to say that 8.8% number should not be doubted, he went on to make broader statements about the kind of quality of data and also said that at that point of time although it is not his department which either releases the data or will correct this data, it is the central statistical organization, he said that there will be some changes, corrections to the number with regard to the 3.7% GDP at market prices.

Subsequent to that Pronab Sen also offered an explanation as to why this wide gap has resulted in the first quarter. Thereafter I spoke to a official of the ministry of statistics and he said that there was a typographical error and these are his words and that would be corrected. He clearly said that the 3.7% number will be revised and would be revised upwards, of course we didn't get a number on that and basically underlined the fact that statement two of yesterdays press release will be changed.

Essentially while there are different economic reasons for it, there is also different interpretation with regard to whether the right deflator was used or not, whether it is just a typographical error or whether there is a basic miscalculation in the data, some laziness that has crept in which always happens with for instance the wholesale price index data that we don't know. The official statement has not come out as yet.

But more or less the government is keen to suggest that the 8.8% number is not in question and all that will really happen if we assume that the 3.7% is revised and revised upwards significantly what it will mean is that some amount of ambiguity and the gap between supply and consumption will be resolved and there will be complete positiveness with regard to the first quarter data assuring the rest of the world and everyone else who is tracking India's stupendous economic growth this fiscal.