India’s GDP Growth – Who Inched The Closest?

Recently CSO (Central Statistics Office) has come out with its projection of India’s GDP growth for FY13. This is not the only organisation that comes out with such projections. We always hear of agencies upgrading and downgrading their GDP projection for a country in a particular year. Well, research houses do pretty much the same thing.

However, there is very little data on how the rating agencies have fared in their projection. In this article, we will take a look at the GDP figures projected by Crisil, Fitch, Credit Suisse and UBS in the last five years, including FY13E figures. We will also compare these projections with the actual numbers.

Let us consider the projections of these leading firms  in terms of how close they got to the real figures.

Crisil

In the above table, Crisil has been quite close as far as the GDP projections are concerned. In FY09, it has predicted a GDP growth of 7% for India and the country actually posted a 6.7% GDP growth. It missed the target marginally. But the scene is slightly different for FY10, where it missed the target by around 190 basis points and the actual figures came in at 8.6% as against 6.7% projected by Crisil. For FY13, the CSO has recently projected a growth of 5% and Crisil has projected 5.5%. In this particular case, we have to wait and watch as to who emerges as the winner.

Fitch Ratings

From the above table, it can be seen that Fitch has been a bit conservative in its projections about India’s GDP growth. In the FY09, it has projected a 6.4% growth as against the 6.7% actual growth. In the years that followed, its highest failure has been during FY10, where it missed the margins by 160 basis points. However, it has been close in FY11 and FY12. For FY13, it has projected a growth of 6% for India as against a 5% projected by the CSO.

Credit Suisse

We are only able to get data from FY10 onwards for Credit Suisse. While in the former two cases we found that FY10 is where they have missed the projections by a healthy margin, the story is different in this case. Credit Suisse has projected a GDP growth of 8.4% as against a growth of 8.6% actually posted by India. However, it has missed the margins considerably by 280 basis points during FY11, where it posted a 6.5% growth as compared to the 9.3% posted by India. During FY13, it has projected a stupendous growth of 7.8% in contrast to the 5% prediction by the CSO.

UBS

There has been some discontent as far as the projection made by UBS is concerned. In most of the years, it has missed the margins by a considerable gap. In FY09, it has missed the margin by 100 basis points. India posted a GDP growth of 6.7% unlike the 7.7% projected by UBS. In the following three years - FY10, FY11 and FY12 - the agency missed the actual GDP growth by 240 basis points, 280 basis points and 150 basis points respectively. For FY13, it has projected a growth of 5.9% differing from the 5% GDP growth projected by the CSO.