India’s economy may grow faster than previously estimated this financial year as the government unveils a new framework for calculating output, highlighting the resilience of the world’s most populous nation to global trade disruptions.
On Friday, the government will shift the gross domestic product base year to 2022-23 from 2011-12 and publish advance estimates for the financial year ending March.
The updated projections may show the economy expanded 7.6% in the current financial year, according to the median estimate of 14 economists surveyed by Bloomberg News. That compares with the government’s 7.4% projection in January under the previous series.
The GDP overhaul is part of a broader effort to update India’s economic data. Earlier this month, the government revised its inflation series to better capture shifting spending patterns in the world’s fastest-growing major economy. Rebasing growth adjusts the weights assigned to sectors to reflect how the economy has evolved over the past decade. Fast-growing areas such as the digital economy and gig work are likely to gain prominence in the new series, while sectors including agriculture
The new GDP series will be critical in determining the future course of policy actions,” said Teresa John, economist with Nirmal Bang Securities. While space exists for the Reserve Bank of India to remain growth-supportive, “a lot will depend on policy inferences drawn from the new GDP series.”
Economists will also look to the new calculation methodology for indications of when India might surpass Japan as the world’s fourth-largest economy. Japan’s economy is about $4.4 trillion, and India has yet to overtake it largely because of the rupee’s sharp depreciation against the dollar last year, though the revised series could significantly lift GDP.
