Revised GDP figures contradict economic slowdown: Assocham

The revised data on the country's gross domestic product (GDP) showing a 6.9-per cent growth in the previous financial year and projections of above 7-per cent growth in the current fiscal is "too good to be realistic" as it refuses to acknowledge that the country ever faced an economic slowdown, according to a survey conducted by apex industry body Assocham.

The new CSO series of data on the country's gross domestic product (GDP) fail to sync with reality and are too unrelated to the underlying figures of the old series to be realistic, a survey conducted by apex industry body Assocham has found.

While sharing the upbeat mood reflected in the union budget, a majority of India's CEOs and CFOs would like the government not to base its optimism entirely on the new numbers, according to a post-Budget assessment mapping done by Assocham.

As many as 76 per cent of about 189 CEOs and CFOs covered under the Assocham survey found the new data showing over seven per cent growth of GDP as too optimistic since the underlying situation is not all that upbeat. ''Even though the new data series may reflect the best international practices, the shift seems to be so sudden that at times, it looks too good to be realistic''. 

The problem becomes more acute when the data of 2013-14 is seen in the context of the new CSO series versus the new series. ''We all realise how bad the previous fiscal was in terms of growth, but the new numbers revise the fiscal 2013-14 GDP growth to 6.9 per cent, Sounds suspect?. Going by these numbers, close to 7-per cent growth in the previous fiscal meant India never faced [a] slowdown!'' the summary of the survey noted.

Assocham secretary general D S Rawat said, ''While a lot of path-breaking steps have been initiated in the Budget like MUDRA Bank for MSMEs, step up in investment in the public sector, boost to infrastructure, increased penetration of the pensions and insurance and the cut in corporate tax, there would be a certain amount of lag before we start seeing results on the ground. Not sure, whether the optimistic outlook as reflected by the new series has taken it into account''.

Based on the new series, real GDP growth is expected to accelerate to 7.4 per cent this fiscal, making India the fastest growing large economy in the world. Under the new series, the share of manufacturing in the country's total GDP has gone up from 12.9 per cent to 17.3 per cent, making the sector look much better. 

''As many as 71 per cent of the CEOs surveyed said they would like to wait for some more time before they could be as optimistic as the government is about the new data, while 68 per of the CFOs said the picture must look getting translated into solid sales and production data on the ground….there is some way to cover.'' 

Initially, even the RBI governor Dr Raghuram Rajan and the chief economic adviser Arvind Subramanian were not sure of the new series data.

The performance of the eight core sectors industries, measured by 2004-05 as the base, grew by mere 1.8 per cent for January 2015. Its cumulative growth during April to January 2014-15 was 4.1 per cent.