‘IMF’s 4.9% GDP projection has a statistical problem’

Planning Commission deputy chairman Montek Singh Ahluwalia on Tuesday questioned the International Monetary Fund’s growth forecast of 4.9 per cent for India in the year 2012.

Written by ENS Economic Bureau | New Delhi | Published:October 17, 2012 1:22 am

Planning Commission deputy chairman Montek Singh Ahluwalia on Tuesday questioned the International Monetary Fund’s growth forecast of 4.9 per cent for India in the year 2012.

“I think,it is the result of a bit of statistical problem,” Ahluwalia said on the sidelines of the Fourth OECD World Forum,adding that growth projection is not reasonable.

“The Indian economy is estimated to have grown by 5.5 per cent in the first half of 2012. This 4.9 per cent GDP growth projection would mean that the economy will further decelerate. I doubt it will,” he said. Earlier this month,the IMF had slashed India’s growth forecast to 4.9 per cent in 2012 from 6.1 per cent estimated in July and 6.8 per cent in April,due to a ‘continued investment slowdown’ and deterioration in the global economic conditions.

But Ahluwalia contended that the IMF estimate was based on market prices. “I don’t think that IMF was aware of the fact that there was this little difference. They just took the GDP at market prices. There is a big difference between GDP at market price and GDP at factor cost,” he said. IMF calculates GDP at market prices whereas Indian agencies do it on factor cost. The GDP at market prices include indirect taxes which is not the case in factor cost.

Meanwhile,official estimates calculated by the Central Statistical Organisation pegged the country’s GDP grew by 5.5 per cent in the April-June quarter. Based on the first quarter GDP data,the Prime Minister’s Economic Advisory Council has forecast that the economy will grow at 6.7 per cent in the current fiscal. The data for the second quarter spanning from July to September will be available by this November-end.

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