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Beyond statistics

RECENT ECONOMIC DATA released recently by the Central Statistical Organisation (CSO) place the anticipated GDP growth for fiscal 2002-03 at just 4.4 per cent. That will be one of the lowest figures in recent years. Admittedly, the CSO's advanced estimates are only a rough indicator. On many occasions in the recent past the initial estimates have been revised, usually upwards. Yet, even granting that the estimates seem overtly pessimistic, there is a need to understand the impact of an announcement that dampens not only growth prospects but expectations too. For instance, business confidence in the country was recently seen to be reviving, raising hopes that the economy will move out of a prolonged recessionary spell. In general, the implications of a below five per cent growth rate on expectations and indeed on the near term outlook of the economy will not be positive.

It will be prudent to place the latest data in its proper perspective before drawing inferences. Over the past four years, the economy grew by 5.5 per cent and over the past three years by 5.2 per cent. So far this year, other economic growth forecasts, such as those by the RBI and the Mid-Year Economic Survey, have anticipated the rate of GDP growth to be between 5 and 5.5 per cent. Interestingly, both the RBI and the Government had brought down their forecast rates by a percentage point compared to their original estimates but even the revised ones were good enough to place India in a select category of countries enjoying a consistent high rate of growth. Equally importantly, the effects of the drought were assumed to have been factored in and were the principal reason for lowering the forecasts. For instance, the CSO's analysis of economic data for the second quarter of the current year (July-September 2002) had placed the GDP growth at 5.8 per cent on top of a 6 per cent growth during the earlier quarter. Agricultural growth then, according to the CSO, was next to nothing but manufacturing and services sectors grew sufficiently to place the GDP growth in the realm of respectability. There were explicit statements from the Government that the economy was resilient enough to overcome the bad monsoon. If the latest CSO data of a more than 3 per cent fall in agriculture during the whole year is in fact validated — and that could happen not earlier than April — both the kharif and the rabi crops would be seen to have failed. Much of the ensuing major economic pronouncements, the Economic Survey and the Union budget, would almost certainly not have the benefit of the revised data. While there has always been a lag time in official statistics, sometimes by as long as two years, this year's data need to be rechecked sooner if only because of the rather ambitious target of an average 8 per cent annual GDP growth set by the Tenth Plan. The current year is in fact the first year of the Plan and while it is clear that the GDP growth will not come anywhere close to the average, it will also fall short of the Planning Commission's estimate of an over 6 per cent growth.

There have been two other responses to the CSO's advanced estimates. According to one view, even with their limitations the statistics do capture the major trends of the economy and are therefore very critical for policy. Other than agriculture, sectors such as manufacturing, construction, mining and quarrying as also services are faring better on a year-on-year-basis. All those including the sharp drought-induced setback to the rural economy fit into popular perceptions. However, there are many questions raised on the veracity of the data, especially those relating to agriculture. State Governments have been known to exaggerate the consequences of failed monsoons and the Union Agriculture Ministry that is the nodal point has no independent means of verifying. It would be useful if the methodology as well the statistics themselves are further refined.

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