India has revised its 2013 economic expansion rate drastically after the country changed the way of measuring national income, bringing it closer to international norms.
As per the new calculations, released on 30 January, the country's gross domestic product (GDP) grew 6.9% in the fiscal year ended in March 2014, compared to the earlier figure of 4.7%. GDP growth rate for the previous fiscal year has been revised up to 5.1%.
Leading to the upward revision of growth, the country changed its base year from 2004-05 to 2011-12, with some changes in scope of coverage/sources. India's statistics office indicated it is now using a much more exhaustive set of corporate financial data than earlier, among other changes.
The country now follows international norms by tracking value addition in the economy at market prices, rather than factor costs. The latter method included production subsidies and excluded taxes on production.
In addition, the revised formula seeks to include under-represented and informal sectors as well as items such as smartphones and LED television sets.
Despite the changes, the absolute level of GDP remains broadly unchanged. So there's no impact on key ratios such as fiscal deficit/current account as % of GDP.
"That the direction of revision is up is not that surprising, but the magnitude most certainly is," said economists at ANZ Bank.
"[Industrial Production] growth has been barely above zero from 2012 onwards. Other indicators, such as auto sales, PMI's etc., painted a less dismal picture than the industrial production data, but they certainly didn't suggest as strong a bounce up as indicated by the new GDP."