The Prime Minister's Economic Advisory Council (PMEAC) has come out with its Review of the Economy for 2013. It begins by making a clear case for why growth since 1991, and to an extent since 2004-05, has been different. As Table 1 shows, the ratio of investment to gross domestic product has steadily increased since 1991, pushing growth higher. In addition, from 2004-05 to 2010-11, the ICOR or incremental capital-output ratio - a measure of how much additional capital is needed to add to output, or in other words how inefficiently it's being used - decreased substantially. Indeed the coefficient of variation (CV) of that ratio has decreased, too, suggesting a more stable environment.
However, the question needs to be asked: What has happened since 2010-11? As Table 2 shows, most sectors have seen a sharp second dip to India's double-dip slowdown following the 2008 global financial crisis. PMEAC posits a turn-up for most of these sectors, but it is uncertain how. This is particularly worrying for the overall industrial sector, as the second part of Table 2 also shows. Table 3 makes it clear that the crisis in manufacturing is visible whether you look at the often-criticised Index of Industrial Production, the Annual Survey of Industry, GDP data or even corporate results. Meanwhile, one major shift PMEAC's report flagged was to India's export destinations. Faced with a major slowdown in Europe in particular, Table 4 shows how Indian trade has changed in proportion since 2006-07. Africa accounts for 2.2 percentage points more of India's trade, while the European Union accounts for five percentage points less. Even the US accounts for almost two percentage points less. (Click for graphs)
However, the question needs to be asked: What has happened since 2010-11? As Table 2 shows, most sectors have seen a sharp second dip to India's double-dip slowdown following the 2008 global financial crisis. PMEAC posits a turn-up for most of these sectors, but it is uncertain how. This is particularly worrying for the overall industrial sector, as the second part of Table 2 also shows. Table 3 makes it clear that the crisis in manufacturing is visible whether you look at the often-criticised Index of Industrial Production, the Annual Survey of Industry, GDP data or even corporate results. Meanwhile, one major shift PMEAC's report flagged was to India's export destinations. Faced with a major slowdown in Europe in particular, Table 4 shows how Indian trade has changed in proportion since 2006-07. Africa accounts for 2.2 percentage points more of India's trade, while the European Union accounts for five percentage points less. Even the US accounts for almost two percentage points less. (Click for graphs)