CSO data on GDP lacks authenticity

The advance estimate of 7.1% growth in the Gross Domestic Product (GDP) for the current financial year ending in March 2017 looks good on the face of it, but clearly defies ground reality – a subdued consumer demand and confidence, distressed trade, tentative corporate performance and rural dismay. While releasing the data for the full year with more than a quarter to go, the Central Statistical Organisation (CSO) did give a disclaimer about not incorporating the impact of demonetisation in its projections about the country’s growth. The deceleration to 7.1% from 7.6% in the previous fiscal has come about on the back of considerations like global headwinds, retaining India’s status among the fastest-growing economies of the world. But such self-congratulatory report card carries no credibility when vast segments of the economy are in a state of disarray.

In the initial days of the note-scrapping exercise, unprecedented anywhere on this scale, India’s micro-small industries reported 35% job losses and 50% dip in revenue, according to a study by the All India Manufacturers Organisation (AIMO). Job losses may go up to 60% and revenue loss to 55% before March 31, the AIMO study further projected. Certain vital sectors of the economy, which are among the largest employment generators, have come to a standstill even as they battle the image of being the ‘parking lot’ for black money and corruption. Real estate and jewellery industries are almost shut, while tourism, infrastructure, automobile, media, fast-moving consumer goods, transportation, among others are in the grip of a slowdown. Agriculture sector and the entire rural landscape — which had a godly opportunity of rewarding farmers and farm workers, courtesy good monsoon — seem to be squandering away prospective gains as distress sales of onion, tomato, potato and several other crops are being reported from a large number of states following the note ban. 

The CSO may have managed to give flattering data by some technical and financial jugglery, but the GDP numbers without factoring in the impact of demonetisation are meaningless and are being taken so by the markets and independent analysts. The Finance Ministry, which is busy making the Budget to be presented a month ahead of the conventional last day of February, would do well not to rely too much on the CSO advance estimates while projecting the revenue and expenditure figures for the fiscal 2017-18. With Prime Minister Narendra Modi and Finance Minister Arun Jaitley admitting visible impact of the invalida­tion of Rs 500 and Rs 1,000 notes on the economy, an ‘ear to the ground’ policy would serve better.