A day after the Central Statistical Office (CSO) projected India's economic growth at an alarmingly low 5% in 2012-13, the worst in 10 years, the finance ministry and the planning commission have contested the estimates with both arguing that the economy will expand by 5.5% when the revised estimates come out later during the year.
"It is likely that the advance estimates of 5% will be revised and the final estimate will be closer to the government's estimate of a growth rate of 5.5 % or slightly more," the Finance Ministry said in a statement on Friday.
Planning Commission, India's top government advisory body, questioned the methodology adopted by CSO to reach the projection.
"CSO does its own thing…it is very difficult to understand," plan panel deputy chairperson Montek Singh Ahluwalia told HT and added that the government's premier data collating organisation had revised its earlier GDP estimates on account of flaws.
Ahluwalia had constantly maintained that the economy this fiscal would grow at somewhere between 5.5 and 6 % and there were enough indications of it since November 2012.
What has perturbed Ahluwalia is that CSO has failed to consider the signs of economic revival since November when Sensex jumped as result of the government's slew of economic reforms. "I have been told that CSO has taken data from April to November 2012 and just projected it," he said.
Abhijit Sen, a panel member and senior economist, felt that the CSO would upwardly revise the GDP estimate once it gets data for November onwards. "A small error in calculation can make a huge difference in the GDP growth estimate," he said, refusing to criticise the CSO.
Another panel member, who was not willing to be quoted, said the poor growth figures could adversely impact the investors looking towards India after the government cleared big ticket economic reforms such as Foreign Direct Investment in multi-brand retail and remove approval hurdles in infrastructure sectors.
The finance ministry said CSO's advanced estimates have often been revised either upwards or downwards because it takes into account the data till November or December.
"... This makes its estimates accurate when GDP growth is following a trend, but not when it is turning. So, for example, growth was overestimated as the economy slowed in 2008-09 and 2011-12, while it is probably underestimated now," the statement said.