Q3 GDP numbers absolutely mystifying, tough to grasp: Ex-CEA

NEW DELHI: Former chief economic adviser Arvind Subramanian on Friday said India’s latest GDP numbers are ‘absolutely mystifying’ and difficult to comprehend.

India’s economy grew by better-than-expected 8.4 per cent in the final three months of 2023 - the fastest pace in one-and-half years.

“I want to be honest with you that the latest GDP numbers, I just simply can not understand them.

“I say that with genuine respect and things. They are absolutely mystifying. They don’t add up. I don’t know what they mean, “ Subramanian said.

The NSO has also revised GDP estimates for the first and second quarters of this fiscal to 8.2 per cent and 8.1 per cent from 7.8 per cent and 7.6 per cent, respectively. Elaborating further, Subramanian said while the implied inflation in these numbers is 1 to 1.5 per cent, actual inflation in the economy is somewhere between 3 and 5 per cent.

“The economy is growing at seven and a half per cent, even though private consumption is at 3 per cent, “ he pointed out.

And in the latest data, Subramanian said errors and omissions, which are not accounted for, are actually about 4.3 percentage points out of the estimated 7.6 per cent growth for FY24.

“So it’s a lot of stuff about the numbers which you know, I don’t understand. I am not saying these are wrong. That’s for others to judge,” the former CEA said.

According to Subramanian, while the buzz is that the economy has become a very good place to invest in, in the last few quarters, and last few years, it has actually declined sharply. “... you can see foreign direct investment actually collapsed quite a bit.” The former CEA wondered if India has become such an attractive place, why is not there more foreign direct investment.

“Private investment, corporate investment is well below levels in 2016,” he pointed out.

To a question, the former CEA noted that Indians really need to disabuse themselves of the notion that India is a big market. “We are not a very big market.”

Elaborating further, he said while India’s GDP is over $3 trillion, the middle class market share would be about $750 billion.