But the country’s chief statistician, T C A Anant, whose office compiled the data and released it on Thursday, claimed he was on sure ground.
“Our calculation of the advance estimate (of national income) is based on the methodology prescribed in the National Accounts Estimates,” Anant told The Indian Express. Referring to the Finance ministry’s observation about early signals showing a revival in the economy which the GDP data had apparently failed to reflect, he said, “We can only go by the data available to us. People in charge of different ministries do often get early warning signals but we don’t know about these”.
The advance estimates of national income for 2012-13 released Thursday stumped the stock and currency markets with a sharply lower forecast for GDP growth at 5 per cent. The Finance ministry had estimated the number in a range of 5.7 to 5.9 per cent while the RBI has projected a 5.5 per cent growth rate a few days ago.
The Finance ministry’s chief economic adviser Raghuram Rajan also said at a CitiMIT Sloan symposium that there were some problems in the CSO’s growth estimate. “It is based on past data. At turning points in GDP growth, looking at past data tends to underestimate growth,” he said.
Anant said the CSO tries to use the latest set of official data including the core sector estimates for December released as late as last week. “Past data can always have a bearing on the projection, especially if there is a change in the trend. But we cannot do anything about the methodology,” he said.
But terming the data disappointing, a Finance ministry statement said, “It is likely that the advance estimates of 5 percent will be revised and the final estimate will be closer to the government’s estimate of a growth rate of 5.5 percent or slightly more.”
In the Indian statistical calendar, the advance estimate is the first in a line of four estimates the CSO releases on GDP data, including more actual figures from sectors for each succeeding revision. But the data released around February 7 every year plays a crucial role as it is used by the Finance ministry for its budget projections.
The CSO uses data available only until November or December, the Finance ministry release contended, adding that several indicators such as the Purchasing Managers’ Index for manufacturing, moderation in inflation and higher indirect tax mop up point to “early sign of an upturn in the economy”.
Along with renewed weakness in global markets, the CSO’s sombre projections pushed the Bombay Stock Exchange Friday to its lowest level of 19,484.77 since January this year. The rupee too ended Friday at 53.5, a loss of 28 paise despite an FII inflow of $280 million in the day. Based on the estimate, analysts have also begun to scale down growth forecasts for 2013-14 to below 6 per cent.