There have been, over the past few weeks, important, if scheduled, announcements on the economy, which in their entirety give valuable insights. At the end of February, the Central Statistical Organisation came out with its estimate of GDP growth for the third quarter of the current year (2008-09). Between October and December 2008, the economy grew by 5.3 per cent, way below the 7.8 per cent recorded during the first six months. Although it was known that the economy was slowing down, the extent of deceleration probably surprised the official forecasters, including the CSO, the Reserve Bank of India and the Prime Minister’s Economic Advisory Council. All three had estimated GDP growth for the year at 7 per cent and over.
The CSO had last announced its advance estimate of growth at 7.1 per cent (for 2008-09) just three weeks before it came out with the sharply lower number for the third quarter. Even the estimates of the RBI and the Economic Advisory Council were not that far back in time: both announcements were made in January.
Estimates of growth in the last quarter (January-March 2009) will be crucial in determining whether a 7 per cent growth is feasible at all. Simple arithmetic tells us that during the current quarter the economy must grow at 7.5 per cent or so to show an above 7 per cent growth for the entire year. On present indications that seems unlikely.
However, a growth rate of between 6 and 6.5 per cent is achievable. Such a rate would be quite impressive by global standards. After all the advanced economies are shrinking and, apart from China, no other major economy of the developing world can hope to match India’s rate.
The CSO had last announced its advance estimate of growth at 7.1 per cent (for 2008-09) just three weeks before it came out with the sharply lower number for the third quarter. Even the estimates of the RBI and the Economic Advisory Council were not that far back in time: both announcements were made in January.
Estimates of growth in the last quarter (January-March 2009) will be crucial in determining whether a 7 per cent growth is feasible at all. Simple arithmetic tells us that during the current quarter the economy must grow at 7.5 per cent or so to show an above 7 per cent growth for the entire year. On present indications that seems unlikely.
However, a growth rate of between 6 and 6.5 per cent is achievable. Such a rate would be quite impressive by global standards. After all the advanced economies are shrinking and, apart from China, no other major economy of the developing world can hope to match India’s rate.
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