GDP to grow by 9.2% in 2010-11: CMIE

The Indian economy is expected to grow by 9.2 percent in 2010-11 following impressive growth in the manufacturing and services sectors, Centre for Monitoring Indian Economy (CMIE) said here.

"We maintain that the Indian economy will grow by 9.2 percent in 2010-11, as we expect impressive growth in the manufacturing and services sectors as well," CMIE said in a statement.

The Index of Industrial Production (IIP) dropped dramatically to 5.6 percent in August, after growing by 13.8 percent in July. It had recorded a growth of 11.2 percent in the June quarter, but we believe that the growth was much higher than 11.2 percent, CMIE said.

This is because sales revenues of the manufacturing companies rose by 23.8 percent, while the rate of inflation in manufactured products (including petroleum products) was 8.2 percent, implying that sales volumes grew by about 14.4 percent.

The IIP has a very old base year (1993-94), outdated weights and a fixed frame of products and companies, and had miscalculated industrial growth for the preceding two years (2008-09 and 2009-10) as well. It is therefore imperative that the index is corrected at the earliest to enable meaningful analysis, CMIE said.
In August, the rate of inflation touched a six-month low of 8.5 percent. It was calculated as per the new series released on 14 September with 2004-05 as the base year. A moderation in the prices of primary food articles, manufactured food products and paper & paper products helped keep inflation in check.

We expect WPI-based inflation to moderate to 7.9 percent in 2010-11, as compared to our earlier projection of 8.5 percent based on the old series, it said.

CMIE expects that the agricultural production to grow by 7.2 percent pc in 2010-11.

The withdrawal of the southwest monsoon has been delayed this year, and the plentiful rain across large parts of the country has encouraged farmers to bring more land under cultivation.

As of October 7, kharif sowing was completed across 1,022 lakh hectares, which was 64 lakh hectares more than the acreage reported in the corresponding period of 2009.

Cumulative rainfall for the season (June-September) is 102 percent of the long period average, according to the India Meteorological Department's end-of-season report.

Agricultural production is therefore expected to grow by a healthy 7.2 percent in 2010-11, after recording a 6.6 percent decline in the preceding fiscal, CMIE said.

Govt to restate part of Q1 GDP, may revise it at mkt prices

After questions were raised on the GDP numbers announced yesterday, the government is in damage control mode. It is likely to revise the GDP at market prices. Finance Minister Pranab Mukherjee says this revised figure will be made public soon.

“What the central statistics office (CSO) gives as a figure, gets corrected sometimes. There's no doubt in it because these are on the basis of random surveys. Therefore there are some errors here and there. The revised figure will be given. Some criticism has been made about the fact that the projection from the demand side is not matching and the growth from that has been projected and that will have to be addressed.”

Former Chief Statistician of India, Pronab Sen said, "The estimates that we make from the production side are in fact very accurate so there is no issue with the 8.8% growth. The difference has actually arisen out of a statistical issue, which is that two different prices are used to get the constant figure. In the case of the production side number we use the WPI, in the case of the expenditure side we use the consumer price index. Now normally the difference between the two indices is about 2% points or so but in this particular quarter as well all know the difference was nearly 8% to 9% and that what’s causing the problem."