India's economy did not fare as bad as was estimated earlier in 2012-13 and 2013-14 with the revised numbers improving the growth rate just below five per cent and above six per cent respectively compared to sub-five per cent calculated earlier. This may mean a bigger challenge for the government to meet its target of 5.4-5.9 per cent growth in gross domestic product for the current financial year, as the base of previous year increases.
Meanwhile, the Centre's fiscal deficit crossed the Budget Estimates in just nine months of the current financial year, which would force finance minister Arun Jaitley to keep the Centre's revenues above expenditure in the last three months to maintain the target of reining in the deficit at 4.1 per cent of GDP.
The gross domestic product rose 4.9 per cent in 2012-13 against 4.5 per cent estimated earlier and 6.6 per cent in 2013-14 against 4.9 per cent given earlier, according to new set of numbers released today by the Ministry of Statistics and Programme Implementation.
If one takes GDP at market prices, then India's economic growth would be substantially higher at 5.1 per cent in 2012-13 and 6.9 per cent for 2013-14.
The two years were almost the last years of the United Progressive Alliance (UPA) government which drew flak for turning the high growth economy to laggard. With the new numbers, the average economic growth now stood at 7.1 per cent in the five year rule of the second stint of the UPA government compared to 6.68 per cent estimated earlier.
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|GDP Growth in %|
The numbers are revised usually once annual survey of industries come, but this time the numbers were also changed because of new base year of 2011-12 against the earlier series of 2004-05.
There is a caveat as well. Henceforth, the government said gross domestic product would include indirect taxes, technically called GDP at market prices instead of GDP at factor cost, exclusive of indirect taxes, which has been taken for calculating economic growth so far. This may put India at par with international standards but will rejig the entire figures of growth numbers calculated so far.
If that is the practice adopted now, India will actually take over China in terms of growth in the next couple of years, if the International Monetary Fund and the World Bank estimates turn out to be true. India's economy is estimated to grow by 6.5 per cent in 2016-17 against China's 6.3 per cent in 2016 and both the growth rates are estimated at GDP at market prices by the Fund. The Bank projected India's economic growth rate at 7 per cent against China's 6.9 per cent.
|Size of India's economy in Rs crore|
Within GDP, share of manufacturing rose from 12.9 per cent in the old base to 18 per cent in new series for 2013-14. The government wants to increase the share from 16 per cent to 25 per cent in a decade. It would get some boost through this statistical illusion.
While share of services will come down from around 58 per cent to 51 per cent, that of agriculture will remain almost stagnant at 18 per cent.
Size of the economy shrank to Rs 88 lakh crore from Rs 90 lakh crore for 2011-12 and Rs 99.88 lakh crore from Rs 101 lakh crore for 2012-13. The economy's size remained same for 2013-14 to Rs 113 lakh crore, which is little less than $ 2 trillion.
|Centre's fiscal deficit as percentage of GDP|
|Source: Ministry of Statistics and Programme Implementation|
With revised GDP numbers, fiscal deficit ratios would also stand revised slightly for 2011-12 and 2012-13. The deficit rose to 5.8 per cent of GDP from 5.6 per cent for 2011-12 and 4.9 per cent from 4.8 per cent for 2012-13. Against much speculation of revision in fiscal deficit ratio for 2012-13, it stood intact at 4.5 per cent.
Meanwhile, the deficit ballooned to Rs 5.32 lakh crore during April-December of 2014-15, crossing a full-year's BE of Rs 5.31 lakh-crore by 0.2 per cent even as the finance ministry has been expressing hope to meet the target of reining in fiscal deficit at 4.1 per cent of GDP.