The dilemma regarding reliability is usually the greatest around the release of advance estimates
Analysts at the Reserve Bank of India (RBI) have questioned the numerous revisions in gross domestic product (GDP) data by the statistics office. RBI has said this confuses analysts about the economy.
It suggested the Central Statistics Office (CSO) incorporate data on high frequency economic indicators such as commercial vehicles and international air passenger traffic. It should employ state-of-the-art methods such as ‘nowcasting’ to arrive at precise estimates of growth in their advance estimates.
A new paper by the analysts examines deviations in economic growth between the first release (or advance estimates) and the final growth estimates, published by CSO. It found the advance estimates tended to underestimate gross value added (GVA) and GDP.
The study titled, ‘Examining Gross Domestic Product Data Revisions in India’, cited examples. For example, it said, GDP grew 7.6 per cent in 2015-16 according to CSO’s first advance estimate. It was changed to 7.9 per cent in the first revised estimate and to 8.2 per cent in the second revised estimate.
“In view of multiple rounds of data revision, it may be confusing for data users to decide on the true state of the economy, and the real strength of growth momentum,” the study noted.
The dilemma regarding reliability is usually the greatest around the release of advance estimates, generally understood to be tentative and liable to change with the arrival of subsequent datasets, it said.
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