India’s 2012-2013 growth projection scaled down to 10-year low — 5%
As all major sectors refused to look up, India’s Central Statistics Office pegged the country’s economic growth in the current financial year much lower than its own earlier projections of growth ranging from 5.7-5.9 percent
RUPAK DE CHOWDHURI/REU TERS
The Advanced Estimates released by India’s Central Statistics Office Febr- uary 7 were a shocker.
As all major sectors refused to look up,
the government agency pegged the country’s economic growth in the current financial year (2012-13) at a decade’s low of 5
percent — much lower than its own earlier
projections — against 6.2 percent in the
previous financial year.
In its mid-year Economic Review, the
government had also estimated growth
ranging from 5.7-5.9 percent. The current
estimate is a sharply lower than the 7.6 percent growth projection for 2012-13 made
by government in Budget.
This growth rate estimate is even lower
than the Reserve Bank of India’s projection
— 5.5 percent — in its quarterly monetary
policy review released a little over a week
Just a day earlier, the International
Monetary Fund had said that the Indian
economy would grow by 5.4 percent in
2012-13, but should pick up to 6 percent in
the next FY.
In 2002-03, the gross domestic product
had grown at 4 percent. Since then the
Indian economy has been expanding at
over 6 percent, the highest rate being 9.6
percent in 2006-07. The Indian economy
had expanded by 8.4 percent in both 2010-
11 and 2009-10, while growth in 2008-09,
the worst of the recession years, was 6.7
In the first half of this FY, the economy
grew at 5.4 percent. This means, noted the
Business Standard, ‘It would expand at a
rate less than 5 percent in the second half,
though exact numbers could not be calcu-
lated as the revised quarterly estimates
were yet to be released.’
It added, ‘While a YES Bank analysis has
pegged growth in the second half at 4.6
percent, Reuters quoted an official as say-
ing that the third-quarter gross domestic
product growth was likely to be 4.8 per-
According to the CS estimates, all major
sectors, except construction (5.9 percent
from 5.6 percent last year), community,
social and personal services (6.8 percent
from 6 percent) and mining and quarrying
(0.4 percent from 0.6 percent), posted
worse rates of growth.
Manufacturing growth is expected to
drop to 1.9 percent, from 2.7 percent last
year. Agriculture and allied services are
expected to grow only 1.8 percent in 2012-
13, against last FY’s 3.6 percent, and industry (including construction) by 3.12 percent, against 3.49 percent.
The services sector including finance,
insurance, real estate and business services
sectors are likely to grow by 8.6 percent,
against 11.7 percent last fiscal.
Growth in electricity, gas and water production is likely to decline to 4.9 percent,
from 6.5 percent in 2011-12.
The trade, hotel, transport and communication sectors are projected to grow by
5.2 percent, as against 7 percent last FY.
However, it is important to note that
these estimates are based on actual GDP
numbers till November, and projections
thereafter. The advance GDP estimates are
released before the end of a financial year
to enable the government to formulate various estimates for inclusion in the Budget.
The finance ministry said, in a statement,
“Since then (November), leading indicators
have turned upwards, giving hope we will
end the year on a better note.
Montek Singh Ahluwalia, deputy chairman, Planning Commission questioned the
CSO’s methodology in computing the
He told the media, ‘I am not certain that
whether they (CSO) have done it in a correct way… I get the impression that they
have not actually addressed the question ...
could it be that the (decline in the) economy
bottomed out, in that case straight forward
linear projection would not be right. I think
it (growth projection of 5 percent in 2012-
13) is very low.’
He added, ‘I have been told that CSO has
taken data from April to November (2012-
13) and they just projected it (advance estimates), I don’t think that they even have
full data for November (2012). They have
some production data and some credit
data. I don’t think that it is very reliable
way of looking at the situation.’
Explaining further that the GDP growth
for 2010-11 was recently revised from 8.4 to
9.3 per cent, he hoped that it may happen
COURTES Y: BUSINESS S TANDARD