In the concluding months of Rajiv Gandhi's prime ministership, some members of the Planning Commission had tried, though in vain, to come up with an Eighth Plan with an annual growth rate of seven per cent plus.

Now the union finance minister says that the Indian economy would grow at nine per cent annually because of on-going reforms. He is very much like Alice in her wonderland. Going by his reasoning, with a vast unfinished reform agenda, if growth is to accelerate this has to be on the strength of industrial sector liberalisation, assuming, of course, that this is duly getting reflected in output growth.

Unfortunately, this is an unduly optimistic assumption. Available national income data for the post-reform years show that the growth process has been largely sustained by the services segment, which is not saying much for the basic strength of the reform effort. The national accounting process, in recent years, has been losing what little credibility it had and serious doubts have been raised about CSO's estimates for 1996-97 and projections for 1997-98.

The savings committee has been under pressure from the government to show up the saving rate, a critical element in investment growth, and the CSO has been told to keep the data base under wraps lest dissenting economists should pick holes in the national income figures put out. The agricultural sector has been a laggard for some years now and remains outside the ambit of reform.

The FM should know that. He should also know that growth pushed by the hotels segment with a staggering rate of achievement is hardly what the nation should be bragging about.

There has been some debate internationally over India's growth performance and recently in Australia a high-powered delegation from here tried to defend the growth projections, the impression was that New Delhi was overstating its achievements. This perception will surely have an impact on foreign investment inflow. It is high time the CSO was given a free hand to compile and present national income statistics consistent with the ground realities. As regards the components of national accounts data while nothing obviously can be done about the contribution by the hotel sector, it is time the government recognised the imperative of making the farm and industrial sectors contribute significantly.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.