Finance Ministry Defends India's GDP Data Against Critics, Says Income Approach Best Reflects Economic Growth

Ministry of Finance issued strong rebuttal to critics of India's GDP data, saying critics just want to portray economy negatively.
Ministry defended use of income approach to calculate GDP, said it does not switch between methods based on convenience.
Former CEA Arvind Subramanian criticized GDP deflator calculation, said it doesn't fully capture inflation impact.
Government explained its GDP deflator relies on Wholesale Price Index, which is contracting after peaking last year.
Ministry conceded GDP data alone insufficient to fully assess economic activity, said critics should look at more high-frequency indicators.

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8/19/2023

Moody’s retains India’s risk rating & 'stable' outlook, highlights Manipur unrest, civil society treatment

### Summary Moody's Investors Service has expressed concerns over the curtailment of civil society in India and the violence in Manipur, while maintaining its sovereign rating for the Indian government's debt. Moody's retains India's rating at Baa3, one level above non-investment grade debt, due to the risky nature of investing in it. ### Facts - Moody's retains India's sovereign rating at Baa3 and maintains a stable outlook. - Moody's notes strengths of the Indian economy, such as strong economic growth, a stronger banking sector, and the provision of digital public infrastructure. - Weaknesses highlighted by Moody's include high interest rates, a relatively high fiscal deficit and government debt, and elevated interest payments. - Moody's raises concerns over the curtailment of civil society and political dissent in India, citing the violence in Manipur as an example. - Moody's projects India's economic growth to outpace all other G20 economies due to domestic demand. - However, Moody's notes that India's growth outlook remains lower than estimates in the past decade and highlights constraints on the economy's ability to increase manufacturing and improve job creation. - Moody's forecasts that the government's debt will stabilize at around 80% of GDP over the next few years, with interest payments remaining high relative to revenue. ### Concerns over Manipur violence and civil society action - Moody's expresses strong concerns over the ongoing violence in Manipur and the curtailment of civil society and political dissent in India. - The note mentions the unrest in Manipur, which has resulted in numerous deaths and a no-confidence vote on Prime Minister Narendra Modi. - Moody's suggests a risk of governments, including at the state and local levels, turning to populist policies in response to increasing domestic political tensions.

9/16/2023

India's Q1 GDP Grows 7.8% But Controversy Remains Over Data Calculation Method

India's government defends its GDP numbers in a 10-point response, stating that it follows consistent practices in measuring economic growth and that other indicators such as purchasing managers' indices and bank credit growth support the growth figures.

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Posted 9/16/2023, 7:40:02 AM