Surprised again by India's strong official growth statistics, economists are relying increasingly on high-frequency indicators like bank credit and rail freight to gauge the real health of Asia's third-largest economy.

For India's cash-reliant economy, Prime Minister Narendra Modi's decision in November to outlaw old 500 and 1,000 rupee banknotes came as a big shock.

The decision sucked 86 percent of cash out of circulation, and everyone from street hawkers to big consumer goods firms suffered a slump in sales.

With data on commercial vehicle output, rail freight, service tax

receipts and home appliance sales showing slowing growth or contraction, economic expansion in the quarter to December was forecast by economists at 6.4 percent.

In fact, it came in at 7 percent, slower than the previous quarter but enough for India to retain the title of the world's fastest growing major economy.

■Forecasting India's GDP has become like predicting the English weather," said one senior economist with an international ratings agency. "You never know when it will rain, when it will shine."

The shock was bigger for economists at Mumbai-based brokerage Ambit Capital, who predicted the economy may even contract in the quarter after the cash crunch hob-

bled businesses.

Ambit's Ritika Mankar Mukherjee defended her team's view, which she said was based on an extensive survey of small- and medium-sized enterprises. She also cited a slowdown in bank credit growth to a multi-year low of 5 percent.

"India is a heavily bank creditdependent economy," she said. "How come you have an acceleration in manufacturing activity when credit growth is slowing down?"

Ambit is one of several brokerages to devise their own measures of economic activity, applying methods honed in China, where GDP figures are suspected to have been "smoothed" for years by the authorities.

"The message from the GDP num-

bers doesn’t tally with what we see on the ground," said Sonal Varma, an economist with Nomura in Singapore. "It does become important to supplement your analysis with additional information."

The official figures were music to the ears of Modi's ruling Bharatiya Janata Party, as it fights a tough election in the battleground state of Uttar Pradesh.

Modi had taken flak for his shock monetary therapy from opposition parties as well as Nobel laureates Amartya Sen and Paul Krugman. Buoyed by the growth figures, he hit back at Sen, who teaches economics at Harvard University.

"Hard work is more important than Harvard," he told a campaign rally in Uttar Pradesh on Wednesday.