Synopsis

ET drew up a longlist of more than five dozen indicators across all key themes of the economy— from the external sector and markets to farm health and jobs. We then applied one filter to each to narrow it down: does an indicator say something that others don’t already say?

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The announcement of a stellar showing by the Indian economy in the first quarter, with growth coming in at 7.8%, sparked intense debate. While many said this had been borne out by upbeat, high-frequency proxy datasets, others said the gains were not being felt on the ground. ET speaks with economists and looks at the trajectory of a wide range of macroeconomic indicators to decode the puzzle: how well is the economy doing, really?

The Indian economy has many moving parts, and indicators that track them come in myriad forms. ET drew up a longlist of more than five dozen indicators across all key themes of the economy— from the external sector and markets to farm health and jobs. We then applied one filter to each to narrow it down: does an indicator say something that others don’t already say? Where a single number masks more than it reveals, we went a level deeper, e.g., we favoured some subindices over well-known indices. Each segment had to tell a complete story—consumption, for example, was paired with credit to flag if spending is debt-led. No such curation can ever be perfect, but the final list has 20 indicators across five segments. The choice of timeframe for each chart was dictated by indicator-specific needs and limitations in data availability and comparability.

Industry and business activity

ET Bureau

ET Bureau

Consumption & Demand

ET Bureau

ET Bureau

Employment, job quality & wages

ET Bureau

ET Bureau

• India’s GDP grew 7.8% in Q1FY27, beating expectations
• The growth was driven by strong investments, robust factory and services activity, despite concerns over West Asia-related headwinds
• This was the third quarterly GDP release under the revised national accounts series with 2022-23 base year
• Concerns were raised over unexpectedly high growth number, but govt said the new series captures more data sources and gives better estimates than before

• Not all the indicators we chose for this special feature go into the computation of India’s GDP. But those that don’t may still contribute towards shaping the sentiment that growth is not being felt on the ground
• All this could be contributing to households appearing to be reporting poor consumer sentiment in RBI surveys after the West Asia war began
• On the external front, trade momentum is healthy, with export orders expanding (though slower than before); however, volatile foreign flows and faster import growth are constraints
• Business-related indicators largely remain strong: credit demand has been accelerating rapidly, capacity utilisation has finally crossed the critical 75% threshold, corporate sales did well in Q1, and a key business expectations index remains above the 100 mark
• Labour conditions are improving gradually, with better employment quality (salaried workers over selfemployed and casual labour). But wage growth may not be to everyone’s satisfaction as inflation stays high and a sizeable share of young Indians in the prime employable age remain on the lookout for work
• On the consumption side, car and twowheeler sales growth have been a bright spot, and tractor sales (a proxy for rural demand) have mostly printed healthy numbers. However, industrial output of consumer non-durables, an indicator for rural demand and household buying power, has seen sagging growth. Creditled spending is strong but has worried some commentators
• Lastly, growth is broadening: non-farm sectors remain strong, while agriculture, the biggest employer, is significantly slower. The poor southwest monsoon rainfall isn’t good news either

We don’t feel the GDP growth on the ground because the statistics ministry’s estimates come in a long series. We start with the first estimate (e.g. 7.8% for Q1, released on August 31) and then these estimates are revised multiple times as more data comes in. You get the final estimates only after two years. Therefore, people get confused. What this means is that 7.8% is not the final number.

The GDP estimates are a lot more than just the aggregation of the high-frequency data. They bring in all sorts of other things and in certain cases, that data set has been improved a lot. For instance, we have the Periodic Labour Force Survey for quite some time as an input to the GDP estimation process. The new one on the block is the Annual Survey of Unincorporated Sector Enterprises (ASUSE), also conducted by the Ministry of Statistics and Programme Implementation. It is not high-frequency because it is an annual report, but it gives you a realistic measure of what is happening in the unorganised sector. This is a dataset that really needs to be tracked because in the corporate sector for which we get data regularly, things are much more stable. ASUSE data is more expansive than the corporate bit.

On the consumption side, we usually don’t have an independent measure of this indicator. If you are really looking at something like the cost of living, you still need to look at the consumer price index (CPI). If you are looking at the cost of production, you would look at the wholesale price index (WPI). If you’re looking at how much the producers are getting, then you will look at the producer price index (PPI). One can do combinations of these to infer other things as well. The high-frequency indicators have not changed much.

**Data, charts, text and reporting by TANAY SUKUMAR, ANOUSHKA SAWHNEY, KIRTIKA SUNEJA; Design: SAMIR KUMAR

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