Indian automobile sales slid sharply in April 2019, according to latest data from the Society of Indian Automobile Manufacturers (SIAM), over the same month’s figure a year ago. Vehicle sales across categories recorded a dip of 15.9% from April 2018. Domestic passenger vehicle sales and two-wheeler sales fell by nearly 17.1% and 16.4% respectively. The gloom is not limited to the automobile sector. Overall industrial activity in the country is in trouble. Factory output, as tracked by the Index of Industrial Production (IIP), contracted for the first time in March—by 0.1%—for the first time in nearly two years.

If alarm bells had not been sounded so far, they now ought to be. The auto sector’s performance, in particular, is the worst it has shown over a span of five fiscal years. That consumer demand for a wide variety of heavy and light products has slumped is clear from sagging sales being suffered by companies operating in assorted markets. These are the numbers that are informally used by many an economy watcher as a “smell test" for the state of commercial activity in the country.

By government statistics for our gross domestic product (GDP), little seems out of place, other than a slight loss of growth momentum. The International Monetary Fund

(IMF), which has recently slashed India’s GDP growth forecast for 2019-20 by 20 basis points to 7.3%, has flagged the need to put Indian calculations to closer scrutiny. Recent revelations of gaps in the MCA-21 database, maintained by the ministry of corporate affairs and used by the Central Statistics Office for its official GDP computation, has added to the problem of Indian data reliability. Of the 35,000 odd companies in the database that are supposed to report their numbers routinely to the ministry, well over a third were untraceable, defunct or misclassified by their sector of operations. Defenders of the database argue that the distortions caused by these gaps are trivial—or too little to make a big difference. What’s undeniable, however, is that India’s economy is doing badly.


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