Credit Suisse said on Friday there are "some reasons to believe" that India's December quarter growth data released after market hours on Thursday "is being under-recorded", according to a research note sent to clients.
"In our view, there are some reasons to believe that GDP growth is being under-recorded," the investment bank said in an email written by economist Robert Prior-Wandesforde and sent on Friday.
"None of the survey data, for example, point to anything like the kind of weakness that is being reported," it added and pointed to a Dun and Bradstreet survey that showed business optimism rising from around the middle of last year.
India's economy grew at a worse-than-expected 4.5 per cent in the quarter ended December, hurt by a slowdown in agriculture, mining and manufacturing, government data showed on Thursday.
Credit Suisse said the data would "surely lump more pressure" on the central bank to respond with an interest rate cut at the March 19 policy review, adding the investment bank continued to anticipate a 25 basis points cut next month, followed by another 25 bps in May.
The Finance Ministry has been prodding Reserve Bank of India to cut interest rates to revive slowing economic growth. The central bank delivered a 25 bps cut in January for the first time since April 2012 and said inflation and the current account deficit remained key concerns.
Questions over the reliability of Indian data are not new. Economists have previously challenged the accuracy of other indicators, saying faulty data makes it potentially trickier for policymakers to take decisions on matters like interest rates.
Credit Suisse said a breakdown of India's December GDP data was better than the headline number, while adding "all these numbers need to be taken with a sizeable pinch of salt given the frequency and scale of revisions that can be made."
As examples, Credit Suisse cited the 1 per cent contraction in investment spending in the quarter, which marked a sharp swing from a 4.1 per cent increase in the September quarter.
The bank also called the 6.1 per cent increase in services output "the real shock," estimating it would be the lowest since the March quarter of 2001.
The government data showed that growth had been hurt by a slowdown in agriculture, mining and manufacturing. Preliminary estimates last month showed the economy is on track to grow just 5 per cent in the current fiscal year to March.
A ministry official told Reuters the data was delayed to avoid coinciding with Finance Minister P Chidambaram's presentation of the 2013-14 budget that started at around 0530 GMT.
"If one were to be cynical, this may of course have been the intention as it didn't make for particularly favourable viewing," Credit Suisse said.
Copyright @ Thomson Reuters 2013
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