The Finance Ministry has claimed that final growth estimate for the current fiscal could be at least half a percentage point more than the Central Statistical Office’s ‘shocker’ projection of five per cent for 2012-13.
“As GDP (gross domestic product) growth is turning, it is likely that the advance estimate of five per cent will be revised and the final estimate will be closer to the Government’s estimate of growth rate of 5.5 per cent or slightly more,” a Finance Ministry’s statement issued on Friday said.
The statement has come at a time when the Planning Commission has raised questions on CSO’s methodology in computing economic growth projections. Deputy Chairman of the Commission, Montek Singh Ahluwalia on Thursday also admitted that there was not enough data for turnaround.
According to the Ministry, CSO bases its advance estimates on data till November or December, depending on availability. It said this made CSO’s estimates accurate when GDP growth followed a trend, but not when it was turning. So, for example, growth was over-estimated as the economy slowed in 2008-09 and 2011-12, while it was probably under-estimated now, it added.
It is, therefore, likely that the advance estimates of five per cent will be revised and the final estimate will be closer to the Government’s estimate of 5.5 per cent or slightly more, the Ministry believes. It has also listed various indicators pointing to early signs of an upturn in the economy.
Among such indicators, the Ministry mentioned the Purchasing Manager’s Index (manufacturing), which started moving up since October 2012.
This is accompanied by a seasonally-adjusted stabilisation of the IIP since October 2012.
It also cited the year-on-year growth in excise duty collection of 16 per cent, and of 33 per cent in service tax in April-December 2012.
The Ministry also highlighted moderation in inflation to 7.2 per cent, particularly core inflation to 4.2 per cent in December 2012 and the Reserve Bank’s decisions to reduce policy rates by 25 basis points.
“Lower rates will help support growth,” it said.