New estimates demand a more nuanced understanding of economic activity.
- New estimates pegged the GDP significantly higher than previous estimates.
- But this jump was not in line with other parameters of economic activity such as corporate profit growth, credit off take etc.
- The new estimation methodology is in line with global norms.
- Where increased value addition, as against an actual increase in quantity of production, leads to a higher GDP.
- This approach can work seamlessly in an economy where all value addition is tracked formally and recorded in well-codified data.
- But for a country like India, where 93 per cent of labour works in the informal sector, this method requires a more nuanced appreciation.