India's surprising GDP growth rate leaves economists puzzled. Here's why

livemint.com:

Mint poll by 17 economists had projected GDP growth at 6.6%. Not only is the growth in October-December high, but the figures for July-September and April-June have also been revised upwards—mainly due to a downward revision in the previous year's figures, thus making a low base. The GDP numbers for April-June and July-September have been revised upwards to 8.2% and 8.1% respectively, up from the earlier figures of 7.8% and 7.6%.

The revisions in numbers are a general practice but their impact varies from year to year. While GDP has shown an impressive rise, the sharp decline in GVA growth has led to worries. GVA growth was just 6.5% in October-December, down from 7.7% the previous quarter.

“The October-December data on India's growth threw up a divergent trend, with the GVA growth moderating broadly on expected lines and the GDP expanding higher than anticipated," said Aditi Nayar, chief economist, ICRA. “This wide gap followed from a surge in the growth of net taxes to a six-quarter high 32% in this quarter, which is unlikely to be sustainable," Nayar added. On the expenditure side, investments were the most rapidly growing component of GDP, contrasting the low single digit growth in private final consumption expenditure and contraction in government final consumption expenditure.

“Going forward, the most critical aspect to watch out for will be a broad-based improvement in consumption growth. The other critical aspect would be a meaningful improvement in private investment," Rajani Sinha, chief economist, CareEdge. Sector-wise, while manufacturing and construction recorded strong growth in the third quarter, the rise was smaller than the previous quarter.