FM still betting on a 9% performance
New Delhi: While lower than estimated agriculture growth has pulled down overall rise in GDP, FM P Chidambaram pointed out that agriculture ministry had estimated production of most crops would touch record levels this year. Appearing satisfied with the double-digit services growth and 9% rise in industrial production, he said, CSO, which had estimated that farm output rose 3.7% in first half, may have been conservative. FM pulled out estimates released by CMIE, National Council for Applied Economic Research and rating agency Crisil — which projected farm sector growth between 3.4% and 3.9% — to argue his case. PM’s Economic Advisory Council (EAC) had, however, been conservative, forecasting farm sector growth at 2.5%. CSO officials said, like every year, they had used the agriculture ministry’s data for area under cultivation. “You have hard data for eightnine months and the projection is on the basis of past trends. There is already talk of poor winter rains affecting crops in north India and it is difficult to say what the rabi crop will be like. But that has not been factored (in CSO’s estimates),” an official said. Barring RBI, most agencies had estimated that the economy would grow by nearly 9% this year. While RBI estimated 8.5% growth, CSO’s estimate is closer to IMF’s 8.75% projection. Chidambaram appeared optimistic of growth being closer to 9%. “I am a bit disappointed but not too despondent. The final news will be better because these are conservative estimates... Let’s see how agriculture turns out. A 3.1% agricultural growth will mean 9% (GDP) growth,” he said. But if the 2.6% farm growth projection proves to be correct, it could mean bad news on the price front. “This will put further pressure on prices since domestic food stock is not strong and globally, food prices are rising. There will be a downward pressure on growth due to global factors and upward pressure on inflation due to food and oil prices,” said Crisil’s DK Joshi.