Sunday, June 7, 2015

India GDP growth graph of the day

India's revised GDP numbers have been variously called as puzzling and confusing. Now, a good friend draws attention to Andy Mukherjee who describes it as a statistical illusion. He constructs a proxy indicator for growth by combining three parameters - corporate earnings (reflects private investment), auto sales (proxy for consumer demand), and software imports (captures productivity gains) - and compares it with the actual GDP growth rate. 
The divergence in the two trajectories, especially since Q4 2012, is striking. In fact, by this indicator, atleast one-third of the GDP growth appears a statistical illusion. 

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