‘Advance estimates point to higher growth going ahead’

Surabhi New Delhi | Updated on January 09, 2018 Published on January 09, 2018

Capital formation showing improvement, manufacturing likely to grow at over 5% in second half, says Chief Statistician Anant

Though the advance estimates of national income have pegged GDP growth at a four-year low of 6.5 per cent this fiscal, Chief Statistician TCA Anant believes that the worst is behind us and the economy will recover in the coming quarters.

“We will see higher growth rates in subsequent quarters,” he told BusinessLine in an interview, adding that all sectors are expected to show a better performance.

Dismissing concerns over rising global crude oil prices, Anant, who is also Secretary, Ministry of Statistics and Programme Implementation, further added, “We need to be a little balanced in our concern about global crude prices going ahead.” Excerpts:

The government is hopeful of a recovery in growth in the coming quarters. What is your view?

Yes, the economy will pick up. We had reached a low point of 5.7 per cent in the first quarter. My expectation is that we will see higher growth rates in subsequent quarters and the advance estimate (AE) is consistent with that expectation. We have also seen an improvement in the growth rate in capital formation. However, capital formation will need to grow faster than the average GVA growth. That has not yet happened. So while improvement is certainly a positive sign, there is considerable space for it going ahead.

Farm sector growth in the advance estimates has been pegged at 2.1 but there is talk that it does not capture the real picture?

We are not saying that the production is low, it is high. The production figure in absolute terms is the second highest in recorded production figures. But our GVA estimates are based on the first advance estimate of the Agriculture Ministry.

What about the slow growth in construction and manufacturing, which do not seem to have recovered fully from the impact of demonetisation and GST?

The GVA growth in the advance estimate for the construction sector is better than in previous quarters. Similarly, for the manufacturing sector, advance estimate has pegged GVA growth at 4.6 per cent this fiscal compared to four per cent growth in the first half. So the average for the remaining year is being projected at over five per cent.

That may well increase the growth even further. We are showing an improvement in manufacturing growth but our projection is based on available indicators of corporate performance up to September and IIP up to October.

The advance estimates use Budget targets for tax collections. But aren’t tax receipts under pressure?

The pressure is fundamentally because of slower realisation of receipts at the moment because a new mechanism has been implemented. The government has given a large measure of latitude to people to pay their taxes over an extended period of time. This does not mean that the taxes due will not be paid. They will have to be paid.

With global crude oil prices on the rise, how much impact will inflation have on growth estimates?

My personal reading is that we need to take a very close look at the long-term trend and appreciate why crude oil prices came down when they did. The general consensus amongst experts is that it will not be possible given the technology today for the OPEC to sustain prices significantly above $60 a barrel for long periods of time.

That will mean that shale production, which has been cut off, would be restored. What sort of prognosis lies ahead for crude prices need to take that into account.

Uncertainties like political unrest in major crude producing countries may happen, but we can not forecast that. But given the stocks, which are available and the existing pattern, I don’t think in the long run, international crude prices are going to be the sort of threat they were in the past. There are too many factors working against it. That’s my reading as an economist.

Published on January 09, 2018
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