India's economic growth last quarter overtook China's growth in its latest quarter. After Indian statisticians changed the way they measure India's economy, the latest quarterly growth for October - December 2014 was +7.5% (vs +5.7% in the previous quarter). This is higher than China's growth of 7.3% in its latest quarter. New Delhi also revised up growth for the first half of fiscal year 2014/15 (to 31 March 2015) to 7.4% from a revised 6.9% a year earlier. The new estimate is sharply higher than the Central Bank's projection of +5.5% using the old method. India now measures GDP by market prices instead of factor cost to take into account gross value additions in goods and services as well as indirect taxes. The base year has been shifted to 2011/12 from 2004/05 earlier. However, many economists, and commentators like ourselves, are confounded by the higher GDP growth reading of 7.5% for the latest quarter. This is because leading indicators such as industrial production, trade and tax collection figures suggest that the economy has not really begun to motor along as fast as growth of 7.5% suggests. The IMF last month predicted that in 2016 India (+6.5% using old method) would overtake China (+6.3%) as the fastest growing major economy.

David Fuller's view

Here is The India Report.

The old method of calculating India’s GDP growth certainly gives us more perspective, in terms of how the country is performing relative to previous years.  What is not in doubt is that India is now performing as one of the world’s fastest growing economies under Modi’s leadership. He was only sworn in as Prime Minister on 26 May 2014, so we have only seen the beginning of his efficiency improvements and growth policies. 

My largest personal stock market investment is in India, via the JPMorgan Indian Investment Trust (JII LN), which currently sells at a discount to NAV of -7.73%, according to Bloomberg.  This is a long-term holding and I often add to my position on setbacks.  The Indian Rupee, shown inversely against the US Dollar, used to be a concern for investors.  However, it has been firm since Raghuram Rajan was appointed Governor of the Reserve Bank of India on 4 September 2013.