India's chief statistician TCA Anant sees a sliver lining in the clouds gathering over the country's economy. Anant says the economy's better performance than the last quarter gives rise to a hope that "we might have bottomed out". In an interview with ET's Shruti Choudhury, Anant talks about the positive signals, the consumption pattern and the importance of reliable sources of data. Excerpts:
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How would you rate the first quarter performance of the economy?
By and large most analysts expected the rates to hover around 5 per cent-5.5 per cent. It's not a brilliant performance but it could have been worse. However, a better performance than last quarter gives rise to a hope that we might have bottomed out as far as the recession is concerned because we had been declining each quarter until now. Hopefully, the graph will be climbing up now.
Can the construction sector single handedly drive the story?
Capital goods are principally linked with investment but the scenario for capital formation doesn't look too exciting. Sometimes construction is a leading indicator signaling a revival in investment by the corporate sector. Cement production too has picked up and this is a huge positive signal. We will have to wait and watch. But let's pause for sometime as the data will be revised when the full data on IIP as well as trade sector come out though the change is usually very small.
The consumption especially from the buoyant rural sector seems to be the only shining star in the growth story...
Rural spending has been able to sustain all pressures till now as per the 2011-12 data. However, there is one caveat on the consumption picture. GDP on the expenditure side measure both the consumption and capital formation on market prices side and this is bound to be hit if the government doesn't withhold subsidies. The growth in net indirect taxes is low primarily because of the ballooning subsidy. This is bound to crowd out both capital formation as well as private consumption as the space will be more than taken over by the government consumption. This concern has been flagged by both the central bank and the economic advisor repeatedly.
You have repeatedly maintained that volatility in IIP is a characteristic of the index and interpretation of the data should be stressed more. How can it be improved?
The volatility in IIP is a statistical property as it is a fixed paced, fixed weighted index with fixed basket. Interpretation is no doubt important but the trouble is also that the estimates are of very short horizon. In such a case reliable data sources become crucial.
How feasible and desirable is the much discussed switch to Producers Price Index?
PPI for some sectors especially in manufacturing can be done and should be done as data is readily available. But PPI's coverage will tend to be limited as when it comes to services, for example, creating a PPI will become difficult. So let's concentrate in making existing index and data collection more authentic and reliable and expanding our sources.
��
How would you rate the first quarter performance of the economy?
By and large most analysts expected the rates to hover around 5 per cent-5.5 per cent. It's not a brilliant performance but it could have been worse. However, a better performance than last quarter gives rise to a hope that we might have bottomed out as far as the recession is concerned because we had been declining each quarter until now. Hopefully, the graph will be climbing up now.
Can the construction sector single handedly drive the story?
Capital goods are principally linked with investment but the scenario for capital formation doesn't look too exciting. Sometimes construction is a leading indicator signaling a revival in investment by the corporate sector. Cement production too has picked up and this is a huge positive signal. We will have to wait and watch. But let's pause for sometime as the data will be revised when the full data on IIP as well as trade sector come out though the change is usually very small.
The consumption especially from the buoyant rural sector seems to be the only shining star in the growth story...
Rural spending has been able to sustain all pressures till now as per the 2011-12 data. However, there is one caveat on the consumption picture. GDP on the expenditure side measure both the consumption and capital formation on market prices side and this is bound to be hit if the government doesn't withhold subsidies. The growth in net indirect taxes is low primarily because of the ballooning subsidy. This is bound to crowd out both capital formation as well as private consumption as the space will be more than taken over by the government consumption. This concern has been flagged by both the central bank and the economic advisor repeatedly.
You have repeatedly maintained that volatility in IIP is a characteristic of the index and interpretation of the data should be stressed more. How can it be improved?
The volatility in IIP is a statistical property as it is a fixed paced, fixed weighted index with fixed basket. Interpretation is no doubt important but the trouble is also that the estimates are of very short horizon. In such a case reliable data sources become crucial.
How feasible and desirable is the much discussed switch to Producers Price Index?
PPI for some sectors especially in manufacturing can be done and should be done as data is readily available. But PPI's coverage will tend to be limited as when it comes to services, for example, creating a PPI will become difficult. So let's concentrate in making existing index and data collection more authentic and reliable and expanding our sources.
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