Economists wide of the mark in projecting growth rate

New Delhi: Economic commentators, think tanks and the Reserve Bank were wide of the mark in their initial projections for this fiscal`s GDP growth, which has now been officially estimated at 6.9 per cent.

The most optimistic projection was made by Chief Economic Advisor Kaushik Basu in the Economic Survey tabled in Parliament in February 2011. The Survey had projected a growth rate of 9 per cent (plus/minus 0.25 per cent) for 2011-12.

However, according to the latest estimate of national income prepared by the Central Statistical Organisation (CSO), the GDP growth will not be even 7 per cent. It has been projected at a three-year low of 6.9 per cent, down from 8.4 per cent in 2010-11.

The others, including Planning Commission Deputy Chairman Montek Singh Ahluwalia and RBI Governor D Subbarao too were way off the mark. Ahluwalia had initially projected that economy would grow by 8-8.5 per cent in 2011-12, though later during the course of the fiscal he scaled it down to 7 per cent.

As regards Subbarao, in his monetary policy for 2011-12 he projected GDP growth of 8 per cent, but later lowered it to 7.6 per cent, and subsequently to 7 per cent. Even the Professional Forecasters, sponsored by RBI, proved incorrect. They had projected a growth rate of 8.2 per cent initially.

Giving reasons for scaling down its forecast, RBI had said that with the weakening of global growth, the Indian economy is also likely to witness some downturn. "Slower global growth will have an adverse impact on domestic growth, particularly on industrial production, given the rising inter-linkages of the Indian economy with the global economy," RBI had said.

The Prime Minister`s economic Advisory Council, headed by C Rangarajan, had earlier estimated the economy to expand by 8.2 per cent in the current fiscal. But later projected it to grow a "shade better than" 6.9 per cent.

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