What did the economists miss in India’s GDP estimates?

In a discussion with Moneycontrol’s Sweta Punj, the experts highlighted the resilience of the agriculture sector which surprised them.

The country's gross domestic product (GDP) growth for the fourth quarter of FY23 at 6.1 percent beat almost all estimates, with most forecasts having pegged it at between 4.4 percent and 5.5 percent.

One of the sectors that surprised economists was agriculture with its resilience. The farm sector grew at 5.5 percent in the fourth quarter against 4.1 per cent in the year-ago period, even as manufacturing growth rebounded to a year-on-year growth of 4.5 per cent after having contracted in the previous two quarters.

Even given that the figures could be revised later, what is it about the India story that the economists missed?

Here are some opinions, as expressed to Moneycontrol.

Surjit Bhalla, economist and former executive director of IMF, and former part-time member of the Economic Advisory Council to the PM

“The governor had hinted that this number would be coming, it was not such a surprise. People had factored in too much of a downturn because of supply shocks and inflation. Economists are not used to analysing such events (times of uncertainty caused by war and pandemic) and, therefore, they were getting it all wrong in India and abroad."

DK Joshi, chief economist, CRISIL

"We did not expect agriculture to grow at 5.5 percent. It dodged all vagaries of the weather. The numbers will keep getting revised. There will be another estimate in January."

Aditi Nayar, chief economist, ICRA

"We did not anticipate the growth in agriculture and manufacturing. Manufacturing had seen a contraction in the last two quarters. The pace of growth was higher than what we were anticipating."

The country's GDP in FY23 stood at 7.2 percent, which is lower than the growth rate of 9.1 percent in 2021-22. The economy grew 13.1 per cent in April-June, 6.2 per cent in July-September, and 4.5 per cent in October-December.

You can watch the rest of the conversation on India’s Blowout GDP Growth: Inside The India Growth Story, here.

https://www.youtube.com/watch?v=g55dM__1MOY