Government’s new national income estimates have “confused and perplexed many” and its measure of growth of economic activity is “quite removed” from what is happening on the street, Bajaj Auto Chairman Rahul Bajaj has said.
It is ‘challenging to reconcile’ 7.5 per cent growth in Gross Value Added (GVA) — a new concept introduced by Central Statistical Organisation (CSO) to measure the economic activity — with what is happening in industry, he said.
“The new national income estimates released by the Government’s CSO have confused and perplexed many,” he said in his annual address to the company’s shareholders.
These numbers suggest that GVA grew 7.5 per cent in 2014-15 versus 6.6 per cent in 2013-14. It seems that much of this extra growth was on account of a larger basket of services, he added.
“I am neither an economist nor a statistician. However, as an industrialist who has run a business for several decades and observed others who manage different enterprises across many sectors, I find it challenging to reconcile 7.5 per cent growth in GVA with what one sees in industry today,” Bajaj said in the company’s Annual Report for 2014-15.
Reinforcing his point, Bajaj said: “Over the last couple of years, there has been little or no growth across many segments of industry and the annual financial results of corporates for 2014-15 (FY2015) show this quite clearly.”
There has been little or no uptick of either in consumer or industrial demand; and despite soft energy prices from the second half of FY2015, companies have struggled with their revenues and profits, he added.
“Some sectors have suffered less; others more. But the sense on the street is that it has been a difficult year quite removed from what one expects out of 7.5 per cent growth. I hope that the government under the premiership of Narendra Modi will usher in higher growth in FY2016,” Bajaj said.
The government in May announced that GVA rose by 7.2 per cent (as against 7.5 per cent estimated earlier) in 2014-15 compared to 6.6 per cent in the previous fiscal.
The manufacturing sector GVA rose 7.1 per cent during the year as against 5.3 per cent in 2013-14. Similarly, the output of electricity, gas, water supply and other utility services rose 7.9 per cent in 2014-15 as against 4.8 per cent a year ago.