The pace of India's economic growth has left China eating dust. But the government's official data is raising eyebrows. One analyst says he's "absolutely surprised" by the latest figures out of New Delhi.
India's economy outpaced regional rival China in the last three months of 2015, official data released Monday showed, as the South Asian nation remains on track as the world's fastest-growing major economy.
The latest figures illustrate how one country's pain is another's gain. While rock-bottom commodities prices and weak demand have drained China's economy, cheap oil is fueling India's expansion.
The New Delhi-based Central Statistics Office (CSO) said gross domestic product (GDP) grew 7.3 percent year-on-year. In the same period, Beijing logged an increase of just 6.8 percent - below the Chinese government's growth target of 7 percent.
While the CSO's latest figures represent a slight slowdown compared to the preceding quarter, the performance still trumped many economists' expectations.
Delhi: city of wealth and slums
The agency also sharply revised growth for the previous two quarters, including raising the rate for July-September to 7.7 percent, up from 7.4 percent reported earlier.
Emboldened by the country's economic outlook, the Indian government now says it expects GDP growth for the fiscal year 2015-2016 to accelerate to 7.6 percent, up from a revised 7.2 percent a year earlier. For that to transpire, though, the economy would have to expand by another 7.8 percent in the final three months through March.
Official data raises eyebrows
But that is a tall order, according to several experts, who are baffled by the government's buoyant mood.
"I'm absolutely surprised by this," said Kunal Kundu, India Economist at Societe General in Bangalore. He is one of many analysts, who say the official data does not jive with what they are seeing in many of India's key industries.
For instance, annual manufacturing growth of 12.6 percent in the December quarter contrasted with other indicators - such as corporate order books, inventory ratios and factory capacity utilisation - that all pointed to weakening momentum.
"The growth they are talking about becomes all the more untenable on the face of what we are seeing in the coal sector, roads, freight, exports contracting for 13 months in a row," he told the AFP news agency.
Doubts about the CSO's trustworthiness have been growing since the agency revised the way it calculates GDP a year ago. The new readings transformed the lumbering South Asian giant overnight into one of the fastest growing major economies.
"At face value these are extremely strong figures. The bigger doubts arise when we try to align the GDP data with what we know of the economy's health from other sources," analysts at Capital Economics said in a note, following Monday's data.
"We should take the official GDP data, and the rate of growth they are suggesting, with a pinch of salt," they said.
Investors and business leaders are also growing increasingly skeptical, as Prime Minister Narendra Modi continues to struggle to win bipartisan support in parliament for long-pending land, labor, bank and tax reforms. Modi is now betting on his finance minister, Arun Jaitley, to provide some relief on February 29 when he unveils India's annual budget, which is expected to include measures to alleviate rural distress and boost investment.