GDP numbers likely to be revised higher: Nomura

The new series for industrial production and wholesale prices suggest that the GDP numbers for financial year 2016-17 could be revised up from 6.7 percent to 7.4 percent, says a Nomura report.

The Central Statistical Office (CSO) revised India’s wholesale price index (WPI) and industrial production (IP) series last week, changing the base year to 2011-12 (from 2004-05).

Industrial production is an input in estimating gross value added for the unorganised manufacturing sector, while WPI is used as a deflator for deriving real GVA values from nominal data.

“We estimate that GVA growth will be revised up to 8.2 percent (from 7.8 percent) for 2015-16 and to 7.4 percent (from 6.7 percent) for 2016-17,” Nomura said in a research note.

The GDP numbers are scheduled to be released on 31 May. The report further said that 2016-17 GDP growth may also be revised up to 7.8 percent (from 7.1 percent in the second estimate), with both consumption and investment growth likely to see upward revisions.

The revisions will also impact the quarterly growth profile. Based on the older series, Nomura expects GDP growth to slow to 6.7 percent in the first quarter of 2017 from 7 percent in the fourth quarter of 2016.

“We forecast GVA growth to slow to 6.8 percent in the first quarter of 2017 from an upwardly revised 7.3 percent in Q4 2016,” Nomura said, adding “overall, the revisions will show a more positive growth outlook”.