What Story Do GDP Numbers Tell

Hi, I'm Monica Hallon and this is my podcast Let's Talk Money. Every Friday a new episode will drop that gives you a snapshot analysis of one money-related topic that has meaning in your life. And then I answer your money questions. My hope is to put you on the path to financial stability and freedom. So let's talk money. Data tells me stories. You know, if I look at a set of numbers long enough, it begins to tell various kinds of things to me. For example, if I look at a couple's financial statements, it becomes clear who's doing what in their lives. Honestly, it does. I can literally predict what lies ahead for the couple just looking at their financial statements. So, but let me transport that insight into looking at India's GDP numbers. These were released on 27th February, 2026 of course. So we've understood that I think all the headlines had all the numbers. I'm not going to waste your time by reading out the numbers. But what we need to know is that these numbers are based on many, many changes in the methodology and data sources. Therefore, this release of GDP. So GDP numbers are announced, quarterly numbers, four times in a year. But this third quarter, the Q3 release is very significant because this is now reflecting a completely reworked methodology and far more data sources. So while the numbers have been there, the story probably has been missed and the story that the numbers tell me is this. India, we are growing at a stable over 7% a year growth. So that's our GDP is growing at 7 plus which is not bad. This growth is being led by a manufacturing sector and the services sector. Agriculture as we know is a small part of the GDP growth. But the big push happens through manufacturing and services on the production side. And how is this growth fueled on the expenditure side? So this is on the production side. On the spending side, it's being fueled by savings of households and the government's capital expenditure. India's growth is still driven by household consumption. But I'm seeing signs of that slowing sluggishness. And the other thing which is slowing or has not picked up is investment by private firms. So governments invest and private firms invest. Right. So the government investment has been strong driving growth. But investment by private sector has been nagging. It needs to pull its weight so that all the wheels can turn together because once the private investment comes in, wage levels go up, that pumps up consumer consumption which completes the circle of growth. So let's get into a little bit about what has happened this year. The first is that the base year. The year on which the calculation rest has been changed from 2011-12 to 22-23. This is the ninth time in India that we have changed the base year. It's nothing new. It is basic hygiene for reporting data the world over. Okay everybody does it. Countries will periodically update their base year because this will reflect the structural changes to a country's economy. Let's take an example we can understand. Quick delivery was not a thing 10 years ago. Was was it? No. And now it drives so much of the household spending. So you need to constantly incorporate the new things which are happening in an economy. The base year change will also update the old data sources and it will incorporate the new data sources. For example, this round of GDP is still using the surveys. The annual survey of unincorporated enterprises, periodic labor force survey, the household consumption, expenditure survey. Many of them have seen changes in the manner of data collection. Okay, I don't want to go into the technicalities of what it is. You just need to know that the old surveys which were being used, they have changed parts of the way that they do it and to supplement this. So this is just a survey. It's people reporting what they're doing, but it's being supplemented by data from actual experience, actual economic activity. For example, GDP estimates will now use the GST data exhausts. Like so GST corrects a lot of data that's got you getting incorporated. The public finance management system, this PFMS captures government's expenditure. This is real time data and their new sources like Eva Hunrayal Transport Data which gives you actual what is happening on the ground. So we are trying to get a fix on the current reality of the Indian growth. One thing that you would have probably heard over and over is that one big change is being double deflation. Sometimes what happens is that the media will latch on to one thing and just like go to town. Double deflation may not be the most important thing. There's been huge other changes, but let me just quickly tell you what it is because it's been so much in the news. So double deflation was used only in agriculture. Now it's being used in manufacturing. Basically what this means is if we are trying to see the real growth of a sector minus the price rise. We need to remove the impact of inflation. So in manufacturing, we used to look at only the final product price and deflate that we would remove the impact of inflation from that. We did not deflate the price of inputs. For example, a cell phone price may have gone up by 10%. But the chip price inside the phone may have gone up by 25%. So this new methodology will use 600 deflators, around 600 deflators, up from the 180 deflators that were being used till the last round. Okay, so that's what that's simply what double deflation means it's not the most important thing, but it's just like something people understood and talked about. So what's the impact of these changes? Look, there's always been a data mismatch between the production side and the expenditure side data. But with this new series, this difference will be eliminated, not just reduced. That's the contention of the government. Second, we have a better reflection of the true story of the Indian growth. It's a good story. There's work to be done. Private sector investment has to start and domestic consumption needs to grow. And this will only grow when households have more income. The government has given to express to nudge consumption, but it's up to the animal's periods of the private sector to really make it happen. So can we trust the state? Every TV debate disintegrates into a fight over the veracity of the state. Is it true? Is it not true? I think we need to distinguish between deliberate manipulation and the rules around data collection and calculation being less than optimal. Now to manipulate data across all the surveys is impossible. There are just too many people involved. To manipulate data exhausts from actual on-ground data like GSTE1 is not possible. You'll have to believe that there is some super power who sits and manipulates this data. It's not possible. So you know the people who don't understand this they use anecdotes to make their points. They need to either come up with another data set or just agree that this is the best possible data that we have and this data is good. So genuine critics should actually do the work to pull out genuine criticisms of the way the data, the rules around the data collection work and methodology flaws. Okay just to dismiss it get this is wrong is like illiterate. So what does it mean for us? We are the non-nourn consumer of this debate. Indian economy is growing at a stable but not spectacular rate. GDP growth is important to all of us in our everyday lives because it translates into higher wages and higher returns on our portfolios. But the fact that in a very very turbulent year with huge geopolitical bullying and risks, India has managed to pull out all 7.6 annual growth for this year. It's commendable. I think we have all participated in this as employees, entrepreneurs, taxpayers, investors, consumers. We should I think raise a good cheer. Now onto questions. I have Thaivasari Jiggan who says I am a fresh BB a graduate. I've been listening to a podcast for a long time. I loved how you converted complex topics into easy ones while comparing them to reality. Since I was in high school I've been very interested in learning about finance, budgeting and investment. With that said my college paved the way to explore more. I have basic ideas about stocks, bonds, shares, mutual funds. My question is, though I have ideas about it, my mind gets easily jammed because of confusion as a beginner. Where and how can I focus? Which broker should I rely on? What do I lack? So Thaivasari, it's actually wonderful to hear that. you're a long time podcast listener. It's just good to know that this is making a difference. You're a BBA graduate, you've got solid basics, you're in a great place to start investing. You have to build habits that last you a long lifetime. You're confused and you know this is something all of us face, that you're jumping between concepts without a clear plan. And this is something that people struggle with, like normally rely on tips instead of personal goals. So you know you've got to really do the work to figure out what you need rather than what people in the market are doing. My suggestion is very simple, please begin with reading, let's talk money. So many BBA schools are now using this book as an essential reading for their personal finance costs. People begin from products unfortunately but it's essential to begin with building money foundation. That's what this book will do. Get your basics right. You will definitely get the more complicated stuff right as you build on it. Arpita Mondal says, "The amount silver prices increasing rapidly should I invest? Where do I do this?" Okay, so Arpita, your question came to me a few weeks back and by now I'm sure you've seen the silver price crash and may not be so keen. But let me use this as an entry into a larger question. Silver prices surged, they went to almost three lakhs, they're down substantially and then there's been a slight uptick so it's up and down. So when your question came I think the one year chart was almost vertical. Silver has risen rapidly but it's also crashed rapidly. This context really matters. Do not buy into something because the price has gone up sharply. It's a sure, sure, sure way to lose money Arpita. Please work with an asset allocation approach. Don't chase last year's return. If silver is going to be part of your allocation then if you had 5% silver it would have gone to like 25% that was your queue to sell right and if that 5 goes to 3 that may be your queue to buy to update your portfolio to 5% silver. Although gold is a traditional hedge of inflation and store a value rather than silver. So not advised. Vinit Sharma says, "I've been reading your books. Let's talk money and which we'll funds. I've reached half way through both parallel. Okay, that's an interesting way we need to read. I am residing in working in the Gulf for almost 15 years. I have the following goals. I'm 48. I'm blessed with a 60-year-old daughter. I'm now going to read out your numbers so much for the daughter's education, for her marriage, for my old age. I've bought a flat in Gurgaal. I've achieved so much in my savings. I've been left my father and investor in FTEs only. Since the growth in FTEs is not much. My only way was to increase the invested corpus. My only source was salary and incentives through sales. So I took a loan which is easily available in the Gulf without mortgage against your crashity. For the past 15 years, I've taken huge amounts of loans and invested them plus my salary savings, all my bonus into FTEs. I've continuously taken a loan for 15 years at interest rates and local bank which used to be 3.5-4.5. So now it's 6. Because I wanted to create a corpus and my return implicit in this is that your return was much higher than the loan amount that you were paying. I have achieved this much of savings. Now I don't know how to start investing in mutual funds. I don't want to touch my FTEs. Since by the time I retire, they should grow even more. I want to enjoy life but these FTEs are too precious. I don't want to touch them. How do I start in mutual funds? I want to live but the mindset of living below my means at my age. I've lost interest in a lot of the luxury items. I've seen a lot of YouTube videos all were suggesting mutual fund investments but I don't know where to begin. So we need such a powerful story. 15 years in the Gulf, living frugally, taking calculated loans at low interest, channeling that into FTEs. That's just not discipline. It's a strategy most financial advisors wouldn't even think to recommend. You've essentially used leverage smartly in its work. Many cases it doesn't work but in your case it has. Many people don't start talking about mutual funds at 48 but I think we can fix that. So look you're not a beginner who needs to build wealth. You've already got assets pinned down. What you need now is inflation beating tax efficient flexible investment options. Your FTEs are doing their job. Don't touch them but FTEs being no. So interest is regular income is taxed at regular income and then it doesn't have the growing power. Your incremental savings can go into mutual funds. So remember that even at age 60 you are still 40% in equity so it's not that late at all. You will always have some amount in equity just to give you that growth over inflation. So definitely start off on mutual funds. I would say through let's talk mutual funds you'll have a very good roadmap of how to do this. It'll tell you step by step. It'll stop short at telling you what products but I think in your case you should just start with the basic index fund and just funnel your incremental savings into funds because the debt side of your portfolio is rock solid. Also maybe if you've really lived frugally this maybe the time to spend a little bit on yourself or your family to live today because remember the frugality mindset is a superpower but it can become a cage for yourself and the family. So you've got the money. You've got the right to spend on what things that matter to you. This is not retlessness. This is really the fruit of what you've done till now. I'm wishing you and your family a wonderful journey ahead. And that's a wrap for today. I enjoy answering your money questions. Remember I don't look at individual portfolios. I don't recommend products. Look upon the space as a place to ask strategy questions doubts and just basic things that you might not understand. Each time you have a good money outcome I feel that I have one. To make sure that you don't miss an episode press follow and help your friends get money smart by sharing a link with them. You can reach out to me at mail me at theratemonicahalon.com that's Monica with the K tag my social media handles at the rate Monica Helen and finally remember that you should have money and money should not have you. So let's talk money again soon. Bye.