Asian Paints on Thursday scrambled to douse a controversy that erupted over an “innocuous” observation made by its MD and CEO Amit Syngle in response to an investor’s question, which was interpreted to mean that he was questioning India’s high GDP numbers.

In a regulatory filing, the company clarified that Syngle’s comments were "misinterpreted’’ after he was asked a specific query by an analyst at a conference held on May 9 about the correlation between growth in the paint industry and the country’s GDP growth.

Replying to Avi Mehta of Macquarie, Syngle had said, “You are correct that the GDP correlation has gone for a toss in the current year. I also feel that today, I am not very sure as to how the GDP numbers are coming.” Syngle’s comments ignited a storm in social media with his observation that the sectoral numbers do not square with national income data — a view held by many in India Inc. but rarely articulated.

The transcript of the meeting with investors quotes Syngle as further saying: “You guys (investors) are better wizards in terms of really understanding … how those numbers are coming and so on and so forth. And sometimes you feel that there is such a variation happening across industries. How does that GDP really correlate to the actual GDP… even if you look at the core sectors, whether it is steel, cement, so on and so forth, nowhere it is correlating with… overall GDP growth’’.

``Therefore, I feel that we need to look at …a normalization of this GDP growth to find out more realistically if we are talking of a 7 per cent growth; whether that 7 per cent really translates to a real-time of 5 per cent or 4 per cent GDP for a certain sector, and therefore look at extrapolating data in terms of seeing how the correlation works out.”

“We are also looking at ways and means in terms of finding out what is the real GDP,” Syngle added.

Asian Paints clarified the comments made by Syngle were being misinterpreted and that it was not in any way, meant to question the sanctity of the GDP numbers as is being projected in the social media and media articles.

“His comments were in response to a specific query on the correlation between the growth in the paint industry and the GDP. In that context, it was mentioned that the correlation of the paint industry growth with the GDP growth is varying, and we are unable to correlate both, unlike in the past,’’ Asian Paints said.

It added that historically, the paint industry was seen growing at a multiple of 1.5 to 1.75 times the GDP growth. But of late, this correlation was distorted. “It was, hence, called out that there is a need for examining the GDP data to understand the reasons for this variance.’’

Asian Paints had posted disappointing results for the quarter ended March 31, 2024. Its consolidated revenues declined to ₹8,730.76 crore in January-March 2024 compared with ₹8,787.34 crore in the year-ago period. The numbers led to some brokerages cutting their target price on the stock.

The Congress pounced on Syngle’s comment to fan the controversy. “Is the fifth largest-economy claim based on fake GDP data? What everyone was saying is confirmed by Asian Paints MD & CEO Mr. Amit Syngle. He said that there is no correlation between GDP numbers and underlying sectors. GDP is off by a huge margin!,” said a tweet from a handle attributed to Congress Kerala.

Raj Subramani, who seemed to be a BJP supporter, riposted: “The only issue here is that Asian Paints needs a better economist who can guide them. Maybe they have an INC supporter now whose knowledge of macroeconomics is as much as a potato can hold.”

The Modi government has become acutely sensitive about the slightest sign of criticism from India Inc. about GDP growth as it has consistently bragged about how the Prime Minister has turned the country into the fastest-growing economy in the world.