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'There is enough scope for recovery in the next few years'

Annapurna Singh, DH News Service, New Delhi Dec 4 2017, 0:00 IST
Financial growth chart

Financial growth chart

Chief Statistician TCA Anant is not only sanguine about India's economic growth being even better in the third and fourth quarters, he also sees an upward revision in the September quarter GDP numbers going forward. His optimism is based on a more robust manufacturing performance in the coming months as also construction, real estate and services. In an exclusive interview with Annapurna Singh of DH, Anant speaks at length. Edited excerpts:

Two major employers -- agriculture and construction -- have not fared well. You still sound positive about the future economic growth trajectory?

In 2016-17, India saw a number of structural adjustments being put in place. We saw the real estate sector regulation. Then, there was demonetisation which led to currency replacement. Thereafter, in the first part of 2017-18, we saw the implementation of GST. Now all of these major structure policy initiatives have worked themselves out in the system and are going to contribute to improved growth in the future. We have already seen that in the manufacturing sector numbers for the September quarter.

But crude prices are again on the rise. Can they play spoilsport?

Oil prices have held at this level for the last eight months or so and the expectation is that they will hold or at least not return to the levels at which they were in 2011-12 or 2012-13. My general sense of the global price scenario is that it is going to stay at this level. I do not expect commodity prices to shoot up until global demand picks up considerably and leads to a shortfall in commodity market.

But global demand is expected to pick up since the global recovery is in the process?

Yes, but it is nowhere close to the levels reached when the commodity prices shot through the roof. There is enough scope for recovery in the next few years to come and the global recovery will actually add to India's recovery rather than us worrying about the price situation. The overall production in agriculture is much better than the average of the last five years. The prospects of growth in manufacturing and services are good. Major structural changes have been put in place which will improve the general efficiency of business so the possibility of growth are on a multifarious levels.

Construction has not done all that good despite government expenditure being front loaded this year?

Somehow there is tendency to view the front loading of government expenditures as negative. But a lot of analysis has shown that the previous practice, where the government expenditure was being lumped in the last quarter, created severe impediments in implementation of projects including in construction. This year the government has presented the Budget early so as to permit early launch of construction projects and early release of money. This will mean much smoother implementation of government projects throughout the year. The government expenditure on capital formation has been good and when the full year data comes in, it will prove that. The challenge is construction activity in private sector. It has not been that good. This is because of enormous institutional problems plaguing the real estate sector. This problem persisted due to weak institutional structure, weak governance, a lot of litigation and so on. Those were sought to be addressed by the new regulatory regime which was put in place last year. That will lead to long term solution in the construction and real estate sector.

Manufacturing has done well but it may be because of festive demand

Manufacturing poor performance in the first quarter was because of GST anticipation. People had shut down production. Now in the second and third quarters because of the festive season, production usually picks up. But this time, we will see in both third and fourth quarters an improved production not only on account of festive season but also on account of the fact that the postponed production of pre-GST period will also come back into the system. As of now, not all postponed production has come back.

Export growth is flat at 1.2% at a time when global recovery is taking place?

There are many factors behind export slowdown. This quarter had seen exporters adapting to a new tax regime. Much of that has already been implemented. It is likely that some of the benefits will start flowing onto exports also in coming quarters.

But don't you think there are some structural problems in exports and we are losing even to Vietnam and Bangladesh now?

I am not in a position to look at the sectoral factors. In terms of larger macro policy initiative, the new tax regime will on the whole benefit exporters as they will get much greater clarity and also there will be a uniform market for procurement.

Finance Minister says 10% growth is still a challenge. Do you subscribe to the view?

Well, 10% is a long way. I think a lot of work needs to be done to reach that level. That is the level which we should certainly aspire for.

We are still working with the 2011-12 base year for GDP calculation. When are we expected to shift to 2017-18?

We are in the process of revising our base year. But it involves a lot of data collection. Some of that has already been initiated, some is in the process. As and when all the data are compiled, we will be in a position to shift to a new base year.

We do not have a regular flow of data on employment. How much of a problem is that for you?

Earlier the data for unemployment came every five years. But we have initiated a new survey for regular data but the first set of numbers from that will come by the end of 2018.

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