India revises key growth data

India has quietly revised a slew of key economic data ahead of new GDP figures due out today, a move economists say raises questions about the reliability of the country’s financial records. India’s Central Statistics Office (CSO) has a history of making frequent revisions, but seasoned experts have been startled by the scale of the latest changes, which were released unannounced on the Internet. Among the most significant alterations, the CSO sharply downgraded growth in the last quarter of the financial year to March 2009 from 5.9% to 3.5%. “That big revision more than three years after the event doesn’t leave one with great confidence in the quality of these numbers,” Credit Suisse economist Robert Prior-Wandesforde said yesterday. “This also adds an extra degree of uncertainty for policymakers,” he said. When the government released its latest quarterly figures, from January to March this year, showing expansion of 5.3%, it made headlines for showing the slowest pace of quarterly growth in nine years. Now, according to the revised figures, that pace of growth is the weakest in just three years. The revisions markedly change India’s growth performance during and after the last global financial crisis, with expansion proving to be slower during the worst phase of the downturn and showing a sharper recovery. Growth in the January to March 2010 quarter during the recovery phase was revised to a hefty 11.2% from 8.6%. Senior CSO department official T Rajeshwari told AFP the revisions did not result from any error but rather reflected a new calculation of industrial output - an important component of GDP figures. “We had to rework the whole series as it was inappropriate to compare the new series (of growth data) with the old data,” Rajeshwari said. Another government official, who declined to be named, conceded the revisions were “quite drastic”. Figures for the latest financial quarter to June are expected to show growth of 5.2 to 5.3% with the economy still hurting from high interest rates, weak investor confidence and policymaking paralysis. This week’s big revisions are the latest in a string. India’s January industrial output growth was cut to 1.1% from an initial 6.8% estimate — a correction the CSO blamed on a miscalculation in sugar production. Then finance minister Pranab Mukherjee described the change that dashed hopes the economy was picking up steam as “totally baffling”. Economists said they did not believe the data revisions reflected any political interference, saying if that were the case India’s economic indicators would be much better overall.