RBI Bulletin Study Suggests Satellite Lights and Google Trends Can Estimate State Growth

A report published in the Reserve Bank of India's (RBI) monthly bulletin indicates that satellite-based night-time lights data and Google search trends may help estimate quarterly economic growth for Gujarat, Maharashtra, and Karnataka. The study reportedly reduced estimation errors by up to 62 per cent compared to a benchmark model relying solely on past gross state value added (GSVA) growth.

It is important to note that the study was authored by RBI staffers, and the views expressed are strictly those of the authors rather than an official stance of the RBI. The research aims to address the common gap in timely sub-national economic data, as official GSVA figures are typically released annually with a lag of 12 to 18 months.

Methodology and Data Sources

Titled *Nowcasting State-Level Economic Activity in India with Night-Time Light and Google Trends*, the research combines two primary alternative data sources:

• Night-Time Light Data: Sourced from NASA’s Black Marble satellite dataset, capturing illumination changes across urban settlements and industrial areas.
• Google Trends Indices: Encompassing 25 search categories, including finance, real estate, jobs, education, shopping, travel, and automobiles, to gauge digital demand.
• Historical GSVA: Incorporated alongside the alternative indicators to formulate current quarter estimates.

The reduction in the root mean squared error (RMSE) was measured at approximately 38 per cent for Maharashtra, 54 per cent for Karnataka, and nearly 62 per cent for Gujarat. Furthermore, year-on-year growth in illumination intensity showed a strong correlation with overall GSVA growth, registering highest in Maharashtra at 0.90, followed by Karnataka at 0.79 and Gujarat at 0.66.

Practical Implications and Limitations

The authors clarified that this framework is intended to supplement, not replace, official economic statistics. High-frequency regional estimates can assist analysts in identifying shifts in economic activity more rapidly, though the study's scope was strictly limited to evaluating Gujarat, Maharashtra, and Karnataka as major industrial states.

Readers and researchers seeking to verify the details can consult the original RBI monthly bulletin or review official publications from the Reserve Bank of India. Future applications across other states will depend on further testing and data availability.