Q3 GDP may be revised lower; see 7.3% full year: iSec PD

A: We place more emphasis on the gross value added (GVA) data compared to the gross domestic product (GDP) data because of measurement issues. So, like you said I think for the full year as a whole I think 7.3 percent is probably in the ballpark at which we are working with. I still think there could be some downwards bias once all the data is in, after the fourth quarter data is in. So, may be there could be a 10-20 basis points downward bias to this GVA data. However, otherwise it looks pretty much inline with what we were looking at. Of course the GDP has got issues in terms of translation from GVA to GDP because of net indirect taxes but that is something which we have been grappling with for many quarters now.

Q: Would you say that this looks like a recovering economy now. Private final consumption is 7.6 percent compared to 6.2 percent, capital formation is 5.3 compared to 4.9, does all this mean that at least it is recovering for sure; economy is on a growth track?A: I would say it is recovering in patches, so like you pointed out that in private consumption is driving the growth and within that particular I would say urban consumption. However, capital formation again I think it continues to be fairly weak considering the trade of the cycle we are in and for how long we have had the say below trade investment numbers. So, that is something which is really worrying and of course the large part of it is because large corporate sector, there the investment numbers are fairly weak because of pretty low capacity utilisation. Despite what the government is trying to do, the share of government in overall capital expenditure is actually fairly low and this kind of segments they are spending on particular railways and road, again they contribute fairly low numbers to overall capex.(Copy edited by Nazim Khan, interview transcribed by Vrushali Sawant)