Government data is sacrosanct, or at least it was till before 2014. With the arrival of the Narendra Modi Government in the Centre, this changed. From the very beginning, the Modi Government engaged in number jugglery to show that the Indian GDP was the fastest growing amongst the major economies of the world. While economists around the world were sceptical about this data, the latest GDP numbers by the Government have left economist baffled.
The latest Government data shows that the GDP grew at 7% for the period of October-December, 2016. According to this data, the Indian Economy did not even register the decision to demonetise 86% of the currency in the Economy. The Prime Minister proudly proclaimed that he was right, while economists from around the world are wrong. He should have at least read his Government's own Economic Survey, which stated that the Economy will grow at 6.5% for 2016-17.
What is the reality? In this new data, the Government has chosen not take into account the entire informal sector, which constitutes nearly 50% of the economy and employs more than 90% of wage earners. This has led many experts to eagerly await the revised numbers in the coming months, which will take into account this section of the Economy.
More worryingly, questions are being raised about the veracity of other numbers. While manufacturing growth was shown to increase by 8.6%, the Index for Industrial Production fell by -0.4%. Gross Fixed Capital Formation, for the past three quarters, that is Q4 FY16 (Jan-Mar), Q1 FY17 (Apr-Jun) and Q2 FY17 (Jul-Sept), had contracted (Year on Year) and at an increasingly faster rate, 1.9%, 3.1% and 5.6% respectively. Yet, for Q3 FY17, against all economic logic this grew by 3.5% (YOY).
The main push for this growth has been consumer spending, but publicly available data has shown that consumer goods firms' earnings were sluggish. The sale of goods of cars, household products, beverages, etc all saw negligible growth. All anecdotal evidence has shown that jobs were lost and businesses were shutting down. Growth of credit to businesses has also been at decadal lows, highlighting how enterprises are not borrowing money.
This has been the hallmark of the Modi Government, where all that they claim can never pass the crucible of a fact check. PM Modi has now moved from making Fake Promises to spreading Fake Data.