The Hindu Business Line : Heady mix

THE CENTRAL STATISTICAL ORGANISATION has given the nation yet another reason to believe in the magic of numbers. Fiscal 2005-06 will close with an 8.1 per cent GDP growth instead of the 7 per cent plus that the RBI and the Finance Minister were betting on. Small wonder then that Mr Chidambaram termed the CSO forecast, along with the Sensex surpassing the 10K mark, a "heady mix". A 7-8 per cent growth for the third year running is surely the nation's pride and neighbour's envy, so to speak. And if the magic of numbers is to bewitch us further, we can read the CSO sector-wise data for 2005-06 through rose-tinted glasses and feel a warm glow; manufacturing at 9.4 per cent from 8.1 per cent the previous year, construction 12.1 per cent, hotels, trade, transport and communication 11.1 per cent, finance, insurance, real estate and personal services, 9.5 per cent.

If these are the high-rises on the economy's skyline, there are also the `shanty town' structures; agriculture at 2.3 per cent, representing a great achievement from the previous year's 0.2 per cent; and mining and quarrying down to just 1 per cent from 5.8 per cent. The magic begins to wear off, slowly. One wonders how that eight per cent growth can be achieved on the back of such laggards as mining and agriculture. Can the economy continue its ascent to 10 per cent, as the Planning Commission deputy chief so confidently thinks it can? Should not the laggards be pulled up if the sturdy climbers are not to be pulled down?

The answers will depend on how fast the magic of the GDP number wears off and we look at the distressing reality behind it. The rural sector is going through systemic failures with the annual rate of foodgrain production lower than the growth of population. Farming is increasingly unsustainable as the suicides in Andhra Pradesh and Maharashtra, and sale of farm-lands for real estate in parts of Kerala, indicate. Power shortages are mounting with the Ninth Plan target of adding 40,000 MW falling short by half, so that an additional capacity of 1 lakh MW has to be commissioned by 2012. Forty per cent of households do not have access to electricity.

Coal mining remains locked in the past. A country with one of the largest reserves of admittedly high-ash-content coal must urgently look for ways to exploit them fruitfully. The new Coal Minister, who vehemently opposed private participation in mining during his first tenure in the same Ministry, is now warming to the idea but the priority now seems to be Coal India and its navaratna status eligibility. The erstwhile captive coal mining policy has not got off the ground; amendments are due but the basic issue is that, contrary to other sectors, the policy on this core sector is greatly flawed. The 8 per cent growth and 10K on the Sensex may be a heady mix, but the economy will head for a hangover if these core yet lagging sectors are not revived.