The announcement of the growth data for the first quarter of the current year (April-June 2012) was keenly awaited for reasons other than the usual ones. During the last quarter of fiscal 2011-12, the GDP growth rate had slumped to a nine-year low of 5.3 per cent. The fear was that the rate for the first quarter of the current year would not be very different, an apprehension which came true with the news that growth was only marginally higher at 5.5 per cent. Last year, the growth rate was at 8 per cent over the corresponding period. Even before the official announcement, most private forecasters had discounted India’s growth prospects for the current year to below 6 per cent. Two official forecasters, the Economic Advisory Council to the Prime Minister and the Reserve Bank of India, had concurred with the government’s expectation of 6.5 per cent growth, although the latter had qualified its rather optimistic projections with a number of caveats. However, worries over India’s faltering growth rates have been accompanied by more basic concerns over the accuracy and integrity of official economic data. There have been sharp and frequent revisions in important statistics. Consequently, there have been question marks over the policy decisions that had been based on such figures. Data relating to industrial output — the monthly IIP numbers — have drawn the maximum flak, including from the RBI Governor, but scepticism over the GDP figures has grown recently with reports of large revisions in data published as far back as 2007-08.
Although revisions in national income statistics are built into the process itself — they pass through many stages such as preliminary estimate, revised estimate and so on — they are expected to be minimal and, as far as possible, confined to the technical errors that are perhaps unavoidable in any large data collection machinery. The first quarter growth, at 5.5 per cent, has been bolstered by a better than expected 2.9 per cent increase in agriculture. Manufacturing has fared dismally, growing by just 0.2 per cent against 7.2 per cent last year. Mining and quarrying continue to be laggards, not surprising perhaps in the context of major lacunae in policies relating to them. The services sector, which was expected to offset the weaknesses in industry, has had a mixed run in the first quarter. The persistent weakness in manufacturing, considered to be symptomatic of the general slowdown, should indicate a softer interest rate policy. But as the RBI has consistently maintained, there cannot be just a single line of attack on a multi-faceted problem which the economic slowdown is.