Chief Statistician T C A Anant believes lower industrial growth than projected at the time of advance estimates will be neutralised by higher agricultural expansion to ensure that the economy expands by 8.6 per cent for 2010-11.
He added a word of caution used by every economist that his assessment would be true if other things remained the same. New factors which came into play after advance estimates were earthquake and tsunami in Japan and political unrest in West Asian countries that jacked up prices of crude among other things.
Data for GDP growth for the fourth quarter and entire 2010-11 are slated to be out tomorrow. Advance estimates have pegged the economic growth at 8.6 per cent. However, in actual, industrial growth stood at 7.8 per cent in 2010-11 compared to 8.15 per cent pegged by advance estimates for GDP.
Anant said this might not impact the overall expected GDP growth, since agricultural growth was expected to be higher than 5.4 per cent projected by advance estimates. “On the final GDP numbers for 2010-11, I feel that industry will pull it down slightly, as IIP (index of industrial production) figures of November onwards haven’t been up to the mark. But, then, this will be compensated by agriculture, because the advanced estimates, which had pegged farm growth in 2010-11 at 5.4 per cent were based on numbers available till December-January. The final numbers could be even higher. Overall, I feel it will neutralise the impact of GDP,” he said.
Industrial growth had been sub-five per cent since November 2010 before it jumped to over seven per cent in March 2011. Anant also made it clear that projecting growth accurately is a tricky question as it has some complex set of data and it is difficult to find out how each set of data will behave.
“One big component is due to agriculture which contributes 16-18 per cent to the GDP. The numbers here are purely guess work as it depends on a lot of factors like monsoon,” he added. The other part, which comprises trade and inflow of remittances, is based on global factors, Anant said. “This time, factors like the oil crisis in Gulf and its impact on global economies, the earthquake and tsunami in Japan and the effect these will have on economic recovery will have to be taken into consideration before the actual figure becomes clear,” he added. Indian economy grew by 8.6 per cent in the first nine months of 2010-11. During this period, industry had a share of just over 18 per cent in GDP, while agriculture also had more or less same contribution to the economy.
Meanwhile, the government has already admitted that economic growth may not be as high as was projected in the Economic Survey at 9 per cent for this fiscal due to high global commodity prices. “This year, because of changing global scenario and many other important organisations having downgraded India’s growth rate, we have decided that we would go back and take another look at our (GDP) numbers in mid-June,” Chief Economic Advisor Kaushik Basu said recently.
Finance Minister Pranab Mukherjee had also said the growth might not touch nine per cent this financial year.