Good performance of the farm sector, has pushed economic growth in the current fiscal to an estimated 4.9 per cent, though it is below potential as manufacturing and mining sectors have continued to be the areas of worry.
“The growth in GDP during 2013-14 is estimated at 4.9 per cent as compared to the growth rate of 4.5 per cent in 2012-13,” according to advanced estimates released on Friday by the Central Statistics Office (CSO). Part of the improvement can be attributed to statistical reasons as the CSO had earlier lowered growth for 2012-13 fiscal to 4.5 per cent in its revised estimates from an earlier provisional forecast of 5 per cent.
While the Chairman of the Prime Minister’s Economic Advisory Council C Rangarajan described it as “encouraging news...Indicating that (economic) slowdown has bottomed out,”the India Inc said the growth was below potential and the Government would need to take steps to boost manufacturing which showed a contraction of 0.2 per cent. “I am confident that final growth estimate in 2013-14 will be not less than 5 per cent” said Finance Minister P Chidambaram.
“The GDP estimates (are) still below potential...What is worrisome is the poor performance estimated in the mining and manufacturing sectors which are in the red. The growth rate would have been lower had it not been for the favourable base effect of last year,” CII Director General Chandrajit Banerjee said while commenting on advance GDP estimates of the CSO.
However, as per the CSO estimates, India is poised to become a $1.7 trillion economy and per capita income will soar by 10.4 per cent to Rs 74,920 in 2013-14. For 2013-14, the CSO has projected a growth rate of 4.6 per cent in agriculture and allied sectors, up from 1.4 per cent a year earlier. Manufacturing, however, is expected to register a contraction of 0.2 per cent in this financial year compared with growth of 1.1 per cent in the previous year.
Mining and quarrying is likely to contract 1.9 per cent, compared with a 2.2 per cent decline in production a year ago. “The advance estimate for GDP at 4.9 per cent for the year 2013-14 released on Friday is largely on expected lines. FICCI has projected GDP growth of 4.8 per cent for the current fiscal year, which is a view corroborated in the recently released FICCI’s Economic Outlook Survey” noted Sidharth Birla, President, FICCI.
The advance estimates of GDP at 4.9 per cent in 2013-14, which is still below potential, is as per expectations and in line with our own forecasts, added Chandrajit Banerjee. With demand not showing visible signs of a pick up owing to weak consumption, investment and Government expenditure, the green shoots of recovery have yet to become apparent. What is worrisome is the poor performance estimated in the mining and manufacturing sectors which are in the red. The growth rate would have been lower had it not been for the favourable base effect of last year.
“The agriculture sector growth is estimated at 4.6 per cent in FY14, and industry and services at 0.7 per cent and 6.9 per cent, respectively. This clearly indicates that moderating performance of the manufacturing sector is taking a toll on the overall growth and is having a commensurate impact on the services sector as well. There has been a considerable loss in optimism and we urgently need to prop up growth in the manufacturing sector. FICCI has repeatedly asked the Government to address the tangible and intangible issues having a bearing on investor perception. To achieve higher growth going forward, the principles of sound governance, clear policies and effective implementation should be adhered to. Also, there is a need to shift to time-bound decisions over time-bound actions,” added Birla.
“Though the Cabinet Committee on Investments has cleared a whole lot of projects last year but the real test of performance lies in their actualization. We hope that best practices learnt through the Cabinet Committee on Investment (CCI) process would be replicated across other areas like environment and forest clearances, taxation, building approvals etc” Birla stated.