An Analysis of Revisions in Indian GDP Data

This paper studies the revisions in the annual estimates of India's GDP data. The objective of the analysis is to understand the revision policy adopted by the Central Statistical Organisation (CSO) and the issues therein. Using historic data, the paper studies the magnitude and quality of revisions in the aggregate as well as the sectoral GDP series. It analyzes the computation of the sectoral revised estimates and compares the extent of revision in growth rates from the first release to the final estimate. To understand the magnitude of revisions, it computes the standard deviation of revisions in growth rates for each sector and use that to build confidence bands around the initial estimates. The confidence bands provide a means to understand the extent of variation in the final growth rate estimate, and at the same time, provide a mechanism to contain revisions. Based on the analysis, the paper highlights some of the major issues in CSO's revision policy. It outlines the possible solutions that can be implemented to improve the quality of GDP data revisions. The paper identifies the sectors with large variations in growth rates and argue that improving or changing the low quality indicators can help contain growth rate revisions and enhance the credibility of the estimates.