GDP VAGARIES IN ELECTION YEARS

There are valid explanations for the variations. But, in an election year, questions will be raised whether non-economic factors are at play

- A K BHATTACHARYA

 India's gross domestic product (GDP) numbers, released last week, surprised most analysts.

The economy grew at 8.4 per cent in the third quarter (October-December) - a six-quarter high- and the second advance estimate (SAE) for 2023-24 placed GDP growth at 7.6 per cent, up sharply from the first advance estimate (FAE) of 7.3 per cent.

The primary reason for the increase in the SAE for 2023-24 was a downward revision in the GDP growth for 2022-23, from 7.2 per cent to 7 per cent. The spurt in net indirect tax collections, too, must have boosted not just the October-December quarter growth but also the annual growth number.

The surprise in the 2023-24 growth numbers, however, may not end here. Remember that this is an election year. General elections to the 18th Lok Sabha will be held in April and May.

Though a rising growth curve before the general elections will indeed help bolster the ruling party's image of having steered the economy well, the key question is whether that growth curve will be maintained in subsequent revisions of the GDP number after the general elections are over.

For an answer, watch out for the provisional estimate of growth for 2023-24, to be released on May 31. Meanwhile, a study of how GDP data revisions took place in 2019, when the last general elections were held, could be instructive.

The puzzle of FY19

On January 7, 2019, the National Statistical Office (NSO) released the FAE of India's GDP for 2018-19, which placed the growth in real terms at 7.2 per cent. This data was released about three months before the general elections were due to be held.