By A Special Correspondent
First publised on 2020-01-10 10:51:04
For the first time after many years, the National Statistics Office (NSO) has presented an authentic report of the state of the economy and pared down the advance growth estimates for FY 2019-20. The government needs to be complimented for this. Window dressing of economic figures is not good for the economy as it makes investors and rating agencies lose confidence in the government and policy-making goes haywire.
The NSO has said that the GPD is expected to grow at only 5% for the full year (in line with the estimate presented by the RBI earlier). The nominal GDP growth is now pegged at just 7.5%, down from the 11-12% estimated in the last Union budget. This means that the entire fiscal math of the budget is going to turn on its head as a gap of 3.5-4.5% is huge. This also means that the government will be hard-pressed to adhere to fiscal deficit norms this year.
If the rest of the report presents a bleak picture it is in line with the ground reality. Economic activity is down all over India and the figures suggest that the recovery process will be protracted. Manufacturing is expected to grow at 2%, agriculture at 2.8% and construction at only 3.2%. Investments are flat and will grow at a mere 1% compared to 10% last year, while trade as a percentage of the GDP will fall to 39.6% against 43.3% last year. Gross Value Added (GVA) will fall to 4.9%, down from the 6.9% achieved last year.
These honest figures, though depressing for the economy, will gladden the hearts of those who abhor window dressing of statistics. The government has realized that actual figures need to be presented for policy-making and investment purposes. It had earlier set up a Standing Committee on Economic Statistics (SCES), to be headed by the former chief statistician of India, Pronab Sen. The SCES has at least three other economists - CP Chandrasekhar, Hema Swaminathan and Jeemol Unni - who had earlier criticized the government for alleged "political interference" in the working of the official statistical machinery and "the tendency to suppress uncomfortable data". Setting up the SCES and the NSO report are welcome moves to set things in motion to present genuine data before investors, think tanks and policymakers.