Backdated statistical kick at FY13 growth

Revised data show GDP rose just 4.5% last fiscal, as FY12 rise was higher than estimated

India's economic growth was already categorised at a decadal low in 2012-13, at five per cent. Now, it stands officially revised to 4.5 per cent.

The revision was made by the government after the gross domestic product (GDP) numbers for the year earlier, 2011-12, were updated. This followed a larger picture of factory production, from the annual survey of industries. For 2011-12, the growth came higher than earlier estimated, at 6.7 per cent against the 6.2 per cent calculated earlier, showed data issued on Friday by the Central Statistics Office. Since GDP growth was revised upwards for 2011-12, that for 2012-13 came down, due to the higher base effect (higher number in the previous year).

Incidentally, economic growth had stood at 6.5 per cent in 2011-12 earlier; it had been revised downwards to 6.2 per cent last year.

The growth in 2012-13 is clearly still a decadal low, the least since the economy expanded only four per cent in 2002-03.

The cheerier bit about the push downwards for 2012-13 is that this lower base will help in slightly pushing the growth estimate upwards for 2013-14. "We can reach five per cent but with a certain amount of luck," said Madan Sabnavis, chief economist at CARE Ratings.

Data for the advance estimates for 2013-14 is scheduled to come next week.

Sabnavis raised concern over such sharp revisions, saying it could be troublesome for policy makers. "We can't have (such) wide variation in the calculations, as these numbers are taken into account while framing policies… the whole interpretation changes," he said.

However, statisticians defended this and said the estimates were based on standard practices followed worldwide.

"There is a well-defined methodology and till you don't have complete data, one uses statistical techniques to fill the gap. These are established international procedures," said the government's former chief statistician, Pronab Sen, now National Statistical Commission chairman.

The solution, Sen said, could be to frequently revise the base on which these calculations are based. "As we move far away from the base, such problems tend to arise. Once the base is changed, the problems are addressed…The only solution is to change base very frequently," he said.

The base for calculation had been kept at 2004-05. It might have been changed in 2009-10 but that was a bad year, so it wasn't done. Sen said the statistical department would come out with 2011-12 as its base for estimates.

The earlier revisions had shown the economy had grown 9.3 per cent in 2010-11, for the first time after nine per cent annual growth was snapped by the global financial crisis of 2008-09. Now, it is below the psychological level of nine per cent, at 8.9 per cent.

The investment rate, captured in the form of Gross Capital Formation, was revised upwards in 2011-12 from 0.5 per cent to 3.9 per cent. However, the final calculation for 2010-11 went down from 15.2 per cent to 14.1 per cent. It rose to 5.2 per cent in 2012-13, indicating the rate was showing a rise even after high interest rates in the economy.

Per capita income for 2012-13 was revised slightly downwards, to Rs 67,839 in 2012-13 from the earlier Rs 68,757.