Payments data good real-time indicator of economic growth

Mumbai: A Reserve Bank of India study shows that payments systems could be used to gauge the vibrancy of the economy and the data generated could be used to do nowcasting of the economy.

At present, India's gross value added (GVA) growth is released with a lag of two months. The RBI paper establishes ground that suggests estimating real-time growth is possible using high frequency monthly payment data.

"The empirical results demonstrate the substantial increase in predictive accuracy for the nowcasts generated by the hybrid approach and the RMSFE (Root Mean Squared Forecast Error) weighting strategy," the RBI paper suggests.


In the absence of timely availability of specific policy-oriented macroeconomic series, there has been an increasing trend of using high-frequency time series data to monitor economic indicators. Among the high frequency data available, payments and settlement data may be counted as a dependable source of information.