The Telegraph
Saturday , February 1 , 2014
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Reality check on growth show

Estimate cut for last fiscal

New Delhi, Jan. 31: Growth for 2012-13 has been revised downwards to 4.5 per cent from the estimate of 5 per cent made in May last year.

The Central Statistical Organisation’s revised estimates — its figures were provisional in May — showed lower growth in farming, mining, and electricity and gas than the earlier projections.

Farm and mining grew just 1 per cent compared with an earlier estimate of 1.6 per cent, while manufacturing, electricity, gas and water supply growth was about 1.2 per cent against 2.3 per cent earlier.

Service sector growth, however, remained more or less steady at 7 per cent compared with 7.1 per cent.

Within the services sector, the laggard was construction, which grew a mere 1 per cent. Financing, insurance, real estate & business services grew at a fast 10.9 per cent; transport, storage and communication by 6 per cent; while community, social and personal services grew 5.3 per cent.

“The earlier set of numbers in May 2013 were based on estimates, now we have more reliable data in agriculture the May 2013 figures were indicator based, now we have actual data. Similarly, in the industrial sector the big difference is not in manufacturing where there is but a small difference the main problem is with electricity, gas and water supply figures, which were earlier estimates and are now based on actual data,” officials said.

GDP (gross domestic product) growth for 2011-12 was revised to 6.7 per cent from 6.2 per cent, while for 2010-11 it was cut to 8.9 per cent from 9.3 per cent.

The Indian statistical department’s data have come in for criticism earlier from the finance ministry and the Reserve Bank, which complained that data glitches meant policy actions were often delayed.

The government believes growth in 2013-14 to be 5 per cent, though many independent researchers and the World Bank feel growth could be 4.8 per cent.

In its macroeconomic outlook, the Reserve Bank of India (RBI) has said growth in the second half of 2013-14 may turn out to be marginally higher than a 4.6 per cent rate clocked in the first half. The RBI expects a rebound in farm output and improved exports because of a recovery in the US and Europe.

“However, industrial growth continues to stagnate and leading indicators of the services sector exhibit a mixed picture. Clear signs of a pick-up are yet to emerge though a modest recovery is likely to shape up in 2014-15. Durable recovery remains contingent on addressing persistent inflation, and the bottlenecks facing the mining and infrastructure sectors,” the RBI said.

Fiscal deficit

Fiscal deficit in the first three quarters of 2013-14 touched 95.2 per cent of the budgeted target for the whole year, suggesting an uphill task for the finance ministry in meeting its targeted deficit of 4.8 per cent of GDP.

The deficit touched Rs 5.16 lakh crore during April-December, or 95.2 per cent of the full year target, compared with 78.8 per cent a year ago, officials said.

Net tax receipts were at Rs 5.18 lakh crore in the first nine months of the current fiscal, while total expenditure was Rs 11.64 lakh crore.

Excise tax receipts were down 6.9 per cent, while customs tax rose 4.3 per cent, far lower than the target of 13.6 per cent.

The finance ministry is believed to have ordered an across-the-board cut in spending in the last quarter, except in key sectors.

It has also stepped up attempts to earn more money from the sale of shares in state-run companies and the auction of airwaves.

Foreign funds

Foreign direct inflows in the eight months till November 2013 stood at $15.46 billion, compared with $15.85 billion during the corresponding year-ago period.