Statistics ministry sees no major revision of FY24 GDP

financialexpress.com:

The statistics ministry doesn’t expect to undertake any significant downward revision to the official economic growth estimate for FY24, and may disprove many analysts in this regard. It also sees the possibility of the gross domestic product (GDP) expansion in FY25 to exceed 7%, with the “strong momentum” being witnessed.

“We don’t think any significant revision is warranted – either for gross-value-added (GVA) or the gross-domestic-product (GDP),”a ministry source told FE, adding that data compilation methodology for computing the national income is “robust”.

As per the National Statistical Office’s provisional estimates, India’s GDP in FY24 grew 8.2%, while GVA grew 7.2%. The unusual gap between the two growth numbers has raised some concerns, and so has the fact that consumption growth was half the GDP rate.

“India’s growth momentum is strong, and this fiscal year in all possibility will witness an above 7% growth in GDP,” the official said. “But the GVA and GDP wedge in FY25 may be much smaller,” the person added.

The Reserve Bank of India has projected India’s economy to grow 7.2% in FY25, but many economists say the growth rate could be lower than 7%, and some have even pegged it at 6.5%.

In the previous financial year, the sharp 100 basis points (bps) gap between GDP and GVA was mainly a consequence of higher collection of indirect taxes as compared to previous years, and a substantial decline in subsidy expenditure. In FY24, subsidy expenditure had contracted 22% on year.

Moreover, the low deflator had also pushed up real growth in FY24. The wholesale inflation (WPI) averaged at (-)0.7% in FY24 as against 9.6% in FY23, which was why the deflator turned out to be unusually low last year.

These factors may not