“When facts change, I change my mind” is what the legendary economist, John Maynard Keynes, is believed to have said. But ever since India’s central statistical office flagged off its new GDP series, a determined band of sceptics have held that they would rather go by their gut feeling than these numbers.

So much so, that one hedge fund recently shut shop in India citing unreliable data, and another stockbroker has cobbled together an index that claims to capture real economic activity better than the official numbers. “If India is growing at 7-plus per cent, how come we don’t feel it?” is a common refrain of market players. They usually cite revenue and profit declines at Nifty companies and sundry statistics from India Inc to bolster their case.

But a recent data release by the RBI explains why the economy may, in fact, be doing reasonably well, without market commentators or stockbrokers being aware of it. What if it is the thousands of small enterprises that are leading this growth?

In any discussion about Indian business, it is listed companies, particularly the Nifty and the Sensex giants, that hog the airwaves. But these companies make up a minuscule portion of what constitutes Indian enterprise. As opposed to 6000-odd listed companies, there are over a 15 lakh companies registered with the ministry of corporate affairs (MCA). The country is also home to over 45 million MSMEs (micro, small and medium enterprises).

Given their fragmented nature, financial data on how the SME universe is faring is hard to come by. But the RBI recently drew on the MCA database to release aggregated financial data for over 2.3 lakh unlisted private companies (this excludes financial companies). From this data, it turns out, India’s large army of unlisted firms have been outpacing the listed firms by a long chalk for the last three years.

There are three clear parameters on which unlisted firms have been trouncing their listed peers. For one, unlisted firms managed far better sales growth in the last three years. They went from 13.3 per cent sales growth in FY13 to 8.7 per cent in FY14 before bouncing back to a healthy 12 per cent in 2014-15. In contrast, listed companies saw their sales growth dwindling from 9.1 per cent in FY13, to 4.7 per cent in FY14 and further to an abysmal 1.4 per cent by FY15.

The listed firms’ performance is no doubt a complete antithesis of the official GDP data which show the economy steadily accelerating from 5.6 per cent growth, to 6.6 per cent, to 7.2 per cent in the last three years. This is what has caused commentators to look askance at the official GDP data. While sales for listed companies may be out of whack with the GDP data, RBI’s new data set shows that numbers for unlisted firms are very much in line with the official data. As the latter make up a far larger universe than listed companies, which would you be inclined to believe?

While the data may seem counter-intuitive, the explanation for this divergence could lie in the kind of sectors that large listed firms operate in. While the listed universe features many giant-sized firms in energy, metals, mining and infrastructure, which are heavily linked to the commodity cycle and have a sizeable global leg to their operations, unlisted firms may have fewer representatives from these two segments of business.

Two, despite earning much lower profit margins than their listed peers, unlisted firms also managed higher profit growth in the last three years. The average operating profit margin of the unlisted firms tracked by RBI was just 9.1 per cent in FY15 as opposed to the handsome 13.6 per cent notched up by the listed firms.

But the pygmies of the unlisted space still managed net profit growth numbers that would be the envy of their listed peers. Their profits grew at 16 per cent, 23.6 per cent and 12.3 per cent in the last three years. Listed companies struggled with shrinking profits, their net profits falling by 2 per cent, 5.1 per cent and 0.7 per cent in the same three years.

Part of the explanation for the profit trends could lie in the fact that unlisted firms were far more cautious about bingeing on debt, than their listed peers. Despite much lower levels of profitability, unlisted firms featured almost the same interest cover (their profits were three times the interest outgo) as listed firms.

This is remarkable because most unlisted companies would find it far harder to secure credit from banks or other formal sources. If they do manage it, the interest rates would be far higher. The fact that unlisted firms have kept their debt servicing costs under check despite this handicap suggests that they have not been as profligate with their borrowings as some members of India Inc have been.

Overall, these numbers suggest that market players may be committing the cardinal error in statistics: that of using too small a sample to draw conclusions about the economy. Maybe their jaundiced view is because of their focus on what seems to be the worst performing segment of the Indian economy — the Sensex and Nifty companies!

If this argument isn’t convincing, there are other indicators that suggest India Uninc is on a firmer wicket than India Inc. Over the last eight years, even as India’s primary market (where public firms raise fresh capital) has been dead in the water, there has been a flash-flood of private equity/venture capital money which has sought out domestic startups and unlisted firms.

Between 2006 and 2014, PE/VC firms poured capital of over $60 billion into over 3,000 small and medium businesses. This is more than three times the money raised in the primary markets, where just 350 firms were able to float IPOs in six years. This trend has accelerated over the last four years, with VCs/PEs pumping in over seven times the funds raised from IPOs. The availability of all this capital to a segment of the economy which has traditionally been capital-constrained, is bound to have boosted growth.

But what does the performance of India Uninc have to do with the new GDP computations? A lot, actually! One of the key changes made by the CSO when it tweaked its GDP computations in 2014 was to broadbase the universe of businesses that are used to measure GDP growth. While it earlier used the data from the Annual Survey of Industries, it now uses the far larger corporate database of the MCA (the same database from which the RBI has sourced its recent data for private firms).

So, if these facts don’t prompt GDP-sceptics to change their minds, they may have to look beyond India Inc to explain why they think the economy really isn’t growing.