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Outliers removed to get meaningful GDP estimate

 

Cogencis, Tuesday, Jan 12, 2021

By Pragya Srivastava

NEW DELHI – The National Statistical Office excluded "a good number" of data while calculating the first advance estimate of GDP for 2020-21 (Apr-Mar), says Statistics Secretary Kshatrapati Shivaji.

Shivaji told Cogencis that the pandemic had imposed several restrictions, which were severely affecting the data in terms of volatility and fluctuations.

EXCLUSIVE

"I would say a good number of data became outliers. We had no option but to get rid of those outliers in order to have meaningful results," Shivaji said.

The statistics office released the first advance estimate last week, which projected this year's GDP growth at a record low of (-)7.7%, marginally lower than the Reserve Bank of India's projection of (-)7.5%.

The first quarter of the year saw an unprecedented contraction of 23.9% in the GDP as the nationwide lockdown imposed to contain the spread of the coronavirus brought the economy to a standstill. Though India entered a technical recession in Jul-Sep, when the GDP fell by 7.5%, experts say a rapid recovery is now underway, with several high-frequency indicators showing an uptick in activity from the end of September quarter.

The first advance estimate of GDP is extrapolated from the data available for the first seven months. The National Statistical Office also uses data on the financial performance of listed companies available up to the end of the September quarter.

This usual practice has been even more difficult this year as even data up to the September quarter was not fully available on account of regulatory authorities providing extensions for the filing of corporate results in view of the pandemic.

"A good number of corporate results, which used to come in time by September, was permitted by regulatory authorities for a delay. As a result, both in terms of volume and time-series data, we have been constrained to a narrow base," Shivaji explained.

The official estimate was close to the consensus estimate of (-)7.5%, according to a Cogencis poll, but some economists are of the opinion that the National Statistical Office's figure may be underestimating growth.

However, the statistics secretary said the National Statistical Office's first advance estimate was based on the objective application of numbers.

"We do not do underestimating or overestimating," Shivaji said.

"We don't want to get into those types of stances where personal, emotional, extraneous views dominate in our result preparation."

A (-)7.7% GDP growth implies an average growth of 0.3% in the second half 2020-21. The RBI has projected a growth of 0.1% in Oct-Dec and 0.7% in Jan-Mar.

The National Statistical Office will release the second advance estimate for GDP growth for 2020-21 on Feb 26 along with the data for Oct-Dec.  End

Edited by Ashish Shirke

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