The Central Statistics Office (CSO), on Thursday, projected a slide in the country’s GDP (gross domestic product) growth to a decade low of 5 per cent in 2012-13, which marks a sharp drop from the 6.2 per cent expansion witnessed in the previous fiscal year.
The CSO, in its advance estimates, pegged the expected growth in agriculture and allied activities much lower at 1.8 per cent for the fiscal year (2012-13) which is just one-half of the 3.6 per cent expansion achieved in 2011-12. Likewise, the growth rate in the manufacturing sector is also seen as slipping to 1.9 per cent from 2.7 per cent in the previous fiscal. Also, owing to external turbulence and subdued demand at home, the robust services sector, which used to make up for the slide in other sectors, is witnessing a growth deceleration.
Needless to say, the Finance Ministry is disappointed and has termed the growth estimates as “below expectations”. The silver lining is that the growth estimates for the entire year are extrapolated based on data for April-November and do not take into account the reform measures put in place by the government and its likely impact in the remaining months of 2012-13.
Reacting to the GDP numbers, the Finance Ministry, in a statement, said: “The CSO’s growth estimate, no doubt, is below what we had expected it to be. We are keeping a watch on the situation. We have taken and we will continue to take appropriate measures to revive growth…As per practice, this projection is based on extrapolation of numbers till November 2012. Since then, leading indicators have turned up, suggesting some hope that we will end the year on a better note. Also, sectors such as trade and transport, which are related to industry, would tend to get revised upwards, if growth outcomes are better,” the ministry said in a statement.
In a similar argument, Planning Commission Deputy Chairman Montek Singh Ahluwalia sought to point to what could be a statistical fallacy. “I am not certain that whether they [CSO] have done it in a correct way. In the past also, the quarterly [GDP] data was very frequently adjusted… I get the impression that they have not actually addressed the question ... could it be that the economy bottomed out, in that case straight forward linear projection would not be right,” he said, indicating thereby that the CSO ignored the growth uptrend seen towards the second-half of the fiscal year while computing the data for the entire financial year. As per the CSO data, the slide to 5 per cent growth would mean that the pace of expansion, in fact, tended to decelerate during the second-half of the fiscal, for the simple reason that GDP growth in April-September stood pegged at 5.4 per cent.
The advance estimates reveal that the services sector, is anticipated to grow by 8.6 per cent this fiscal as compared to 11.7 per cent in 2011-12. The only plus points are that the mining and quarrying sector is expected to return to positive territory with a growth of 0.4 per cent as compared to a 0.6 per cent contraction a year ago and the growth in construction is also likely to be slightly higher at 5.9 per cent against 5.6 per cent.