Salient to Investors:
Official inflation data is often incomplete or months out of date.
Jahangir Aziz at JPMorgan Chase said that to a large extent, the Reserve Bank of India is essentially making decisions in the dark – India lacks a solid, good measure of inflation with much broader coverage of services, and it’s almost unthinkable for RBI to make policies without knowing unemployment. Economies from Indonesia to the EU and the US include services such as education in inflation measures.
The most recent jobless estimate is at least four months old, while the official unemployment-rate is based on a sample of about 0.05 percent of Indian households.
Rupa Rege Nitsure at Bank of Baroda said if the true extent of inflation was known to the central bank, they probably wouldn’t have been as aggressive.
Revisions to economic figures buffet Indian investments. Ganti Murthy at Peerless Funds Mgmt said huge data revisions lead to improper asset allocation by investors and cause unnecessary market volatility.
The IMF says India’s economic data is adequate for surveillance, but weaknesses remain in the timeliness and coverage of certain statistical series. The IMF predicts the Indian economy will expand 4.9 percent in 2012, the slowest pace in a decade.
Rahul Bajoria at Barclays said India’s data falls short on many benchmarks as compared to other nations in the region.