Amid criticism that the Central Statistics Organsiation (CSO) has projected an ambitious economic growth rate of 7.6% for the current financial year, National Statistical Commission chairman Pronab Sen said on Wednesday the advance estimate was based on just a “guess work” for the fourth quarter and the rate of expansion would be revised once the provisional full-year data were collected.
“The fourth quarter in any case is an advance estimate. The CSO’s position is that it shouldn’t be in the business of making forecasts. But since the Reserve Bank of India and the finance ministry want it,we do it. But it can be said the advance estimate is on relatively weaker statistical basis,” Sen told FE in an interview. Sen oversaw the latest methodology used for the computation of national income with 2011-12 as the base year.
“Normally, we study the patterns observed in the previous years and use that to extrapolate data for the fourth quarter and issue an advance estimate. But these patterns are not absolute, and they can change. That’s why a provisional estimate for the full year will come only by end-May when we have all the data available,” he added. The gross domestic product (GDP) rose 7.2% in the last fiscal.
To better capture services, which account more than a half of the GDP, Sen said the CSO is planning to undertake an annual survey of services, just like the current annual survey of industries. He added that the GDP data will also be revised once the new IIP series with 2011-12 base year comes into effect. The work on the IIP series has been delayed, mainly due to floods in a major commercial centre like Mumbai, and is now expected to be in place by September, Sen said.
Asked if an almost 12% expansion in the private final consumption expenditure for the fourth quarter is achievable (that’s required to achieve the CSO’s full-year estimate of 7.6% for the segment) given subdued rural demand, Sen said that data could also be revised.
Even the estimate for the third quarter will be revised, as it is based on partial data. This is because many companies were yet to announce their results for the December quarter when the CSO had to estimate the third quarter GDP growth, he said.
On the surprise 12.6% rise in the gross value added for manufacturing in the December quarter despite floods in Chennai, a major commercial centre, Sen said the expansion looks higher because the WPI in the GDP deflator was negative for the quarter. Also, the base was much more favourable (the GVA in manufacturing had grown just 1.7% in the third quarter of the last financial year).
In nominal terms, the growth in GVA in manufacturing has been recorded at 10.9%, and this may also be changed once we get the results of all the companies for the sector, he added.