Growth endures

Updated: Feb 2 2006, 05:30am hrs
Central Statistical Organisations (CSO) new series with a base year of 1999-2000, placing Indias growth estimate for 2004-05 at 7.5% against the previous 6.9%, is positive news, especially as it comes on a high base of 8.5%. While the change in the base year is, perhaps, partly responsible since the new weights are bound to reflect sectors that were excluded in the past we will know for sure only when details on sectoral estimates are released later this month. What is significant is that we are finally on our way to more prompt and better economic statistics. The fact that a revision has been made after a six-year gap is a sure improvement over the earlier 10-year cycle. At the same time, it is curious that the nominal GDP levels have not shown much variation between the two series.

The new series comes with several improvements in coverage and precision and is reported to be more in line with the recommendations of the United Nations System of National Accounts, 1993. It takes data from the latest NSS rounds on employment, consumer expenditure, unorganised manufacturing, and services sectors, as well the SSI survey (2001). Economic activities that are now significant but not accounted for so farfor instance, computer-related activities in the unorganised segment, coaching centres, et al, have been included. While sectoral details will be given later this month, a change in weightage pattern has been provided. For instance, an upward and significant revision comes from real estate, ownership of dwellings and business services whose weight has been increased from 5.8% to 7.1%, reflecting the trend in these sub-sectors.

What does the revision imply for this years growth Though RBI recently revised its assessment to the 7.5%-8% range, that was built on a 6.9% base, so presumably, the FM is well within his rights to assume 7.5% growth achievable this year, especially with the farm sector set to record a turnaround. That, together with a buoyant industry and services sector alongside and investment on an upswingas reflected in CSOs revised investment-GDP ratio at 30.1%, against the previous 26.7% estimatesuggests 7% plus growth is feasible.