Govt pegs growth rate at 7.2%;lower than anticipated by PM,FM

New Delhi, Feb 8 (PTI) Amid the debate over continuation
of the stimulus package, the Indian government Monday forecast
economic growth at 7.2 per cent for the current financial
year, a shade lower than 7.5-8 per cent projected by Prime
Minister Manmohan Singh and Finance Minister Pranab Mukherjee.
Lower than anticipated growth projection for 2009-10
comes at a time when the Reserve Bank of India has started
tweaking key monetary policy instruments to contain inflation.
The projections for 2009-10, put out by the Central
Statistical Organisation in its advance estimates for the
national income is, however, higher than 6.7 per cent recorded
by the economy a year ago.
Farm sector output is expected to contract 0.2 per cent,
while the services sector will record moderate growth, it
said.
Manufacturing is estimated to grow by a robust 8.9 per
cent this fiscal, which may prompt the government to withdraw
stimulus in a phased manner.
"We should say stimulus has succeeded and we should begin
to phase it now," Planning Commission Deputy Chairman Montek
Singh Ahluwalia said even as industry vehemently pitched for
continuation of the tax concessions.
Federation of Indian Chambers of Commerce and Industry
Secretary General said if monetary tightening is combined with
withdrawal of stimulus measures, it would be dangerous for the
economy and employment.
Evading a direct reply on the issue, Finance Secretary
Ashok Chawla said, "In terms of what the future policy
framework is going to be, I think you will have to wait for
the Budget," he said.
According to the advance estimates, mining and quarrying
is likely to grow by 8.7 per cent compared with 1.6 per cent a
year ago, while electricity, gas and water supply by 8.2 per
cent against 3.9 per cent.
Trade, hotel, transport and communication is also
estimated to rise by 8.3 per cent against 7.6 per cent last
year and construction by 6.5 per cent in Financial Year '10
from 5.9 per cent in FY'09.
However, other services like financing, insurance, real
estate and business services are likely witness fall in
expansion and grow by 9.9 per cent this fiscal against 10.1
per cent last fiscal and community social and personal
services by 8.2 per cent compared with 13.9 per cent.
Yes Bank Chief Economist Shubhada Rao said: "(CSO
estimates are) slightly lower than expected. The performance
of the services sector has not been up to the mark. But
surprisingly there is shallower contraction in the agriculture
sector."
She expected a possibility of upward revision of GDP
because of likely revision in growth in the services sector.
However, farm is likely to deteriorate further she said.
On dip in services growth, the Finance Secretary Ashok
Chawla also said the final figures would be better than those
put out by advance estimates.
Advanced estimates are released before the end of a
fiscal year to enable the government calculate various figures
like fiscal deficit in the Budget.
The stock markets initially reacted negatively to the
data with the benchmark index Sensex falling over 200 points
after the advance estimates were released. However, it later
bounced back and was trading at over 100 points from Friday's
close.
These advance estimates are calculated on the new base
year of 2004-05, than 1999-2000 as was the practice earlier.
As such, the government will get statistical advantage of
revising down fiscal deficit at 6.5 per cent of GDP than
budget estimates of 6.8 per cent as size of the economy is
pegged higher at Rs 61,64,178 crore this fiscal.
Central Statistical Organisation has full actual data for
the first half, partial data for the third quarter, and no
actual data for the Q4, while putting out advance estimates.
That is why, the final numbers under go some revision from the
advance estimates.
While Chawla expect higher final numbers, GDP growth, in
fact, was revised downward to 6.7 per cent last fiscal from
7.1 per cent projected in the advance estimates.
Even as estimated 7.2 per cent growth rate for this fiscal
is lower than RBI's and Finance Ministry's projections, the
second half is estimated to grow at higher rate than seven per
cent recorded in the first half.
This is despite the fact that RBI and other economists
project economy to register lower growth in the Q3 than the
stunning 7.9 per cent in the second quarter.
Chief Economic Advisor said, "It (advance estimates)
portrays, it confirms, what earlier was matter of speculation
that India has clearly turned from the downturn." PTI MG
RMI
KAB