Montek plays down IMF's growth projections for India

Terms 4.9% projection as a statistical problem

Much has been read into IMF's move to cut projections for India's economic growth to 4.9% for this calendar year from earlier
estimate of 6.2%. However, India today played down IMF's projections, saying the multi-lateral agency is not aware of
differences on subsidies front in India that has resulted in too low a number for GDP growth.

On the sidelines of an OECD event here, Planning Commission deputy chairman Montek Singh Ahluwalia termed 4.9% projections as a
statisticial problem.

In the first half of this calendar year, the economy grew by around 5.5%, he said.

I don't believe that the year as a whole 4.9 is reasonable. That would imply that the economy will further decelerate. I don't think it
will," Ahluwalia said.

IMF calculates GDP on market prices (inclusive of indirect taxes), while India calculates it on factor cost (exclusive of indirect
taxes).

If GDP at market prices are taken into account, India's GDP in fact grew by just 3.9% in the first quarter of the current fiscal,
instead of 5.5% as officially estimated.

Ahluwalia attributed this big difference between GDP at factor cost and at market prices to big increase in subsidies payment. Subsidies
are taken as negative taxes and hence will have to be subtracted in market prices calculation of GDP.

"I don't think that IMF was aware of the fact that there is this little difference. They just took the GDP at market prices," the
Planning Commission deputy chairman said.

In fact, Tom Richardson of IMF had earlier explained in an interaction on Facebook that if indirect taxes are included and the year 2012-13
is taken into account, IMF's estimate of GDP would change to 5.6%.