You are here: Home » Economy & Policy » Q&A
Business Standard

S&P has always been very pessimistic on India: T C A Anant

Interview with Chief Statistician, Government of India

Dilasha Seth  |  New Delhi 

T C A Anant, the Union government’s chief statistician, thinks global rating agency Standard & Poor’s (S&P) does not fully understand our economy’s structure, comprising a large unorganised sector as well. He tells Dilasha Seth industrial growth in April is not encouraging, but not disappointing. However, capital goods and mining continues to be areas of concern. Edited excerpts:

How would you react to Standard & Poor’s statement that India could be the first among BRIC members to see junk ratings?
S&P worries me. It has always been very pessimistic on India. Even when the growth rates were good, India’s ratings were much worse than others. It is partly because they find it difficult to read India. India is a developing country and is much more complex than other nations. They would like to sit in their particular perspective of the developed world, and we don’t quite fit in there

Why do you say that?
One way in which we don’t fit is the structure of the economy. We have a large informal sector and continue to have large dependence on agriculture, in terms of activities in the rural areas. Rural size is still very large. This makes it very difficult for them to read our economy. On the one hand, we have the characteristics of a very strong and organised modern economy, and we also have the unorganised rural economy. We have internal strengths which are different from other countries.

The government expected growth to revive this financial year. But industrial growth in April does not seem to signal that. Why did industrial growth barely manage to grow 0.1 per cent?

April is the beginning of the financial year and it is partly a reflection of how aggressively companies booked production in March to shore up year-end figures. This is one major reason why one should also look at IIP (Index of Industrial Production) numbers in a seasonally adjusted form. It is not difficult to do it. My guess is if you adjust it seasonally, it will not look as disappointing as 0.1 per cent.

You mean the numbers are not disappointing?
In April 2010-11, IIP growth was 13 per cent, in April 2011-12, it was five per cent, so definitely there is a slowdown. The fact is 5.3 per cent growth in April was continuation of the robust growth in March. This time, we had contraction in IIP numbers in March. Given that, I don’t say April numbers are great, but I would also say, these were not that disappointing.

The capital goods component in the IIP is consistently negative for the past few months, barring February. What needs to be done to revive it, as it is bringing down the overall numbers?
Capital goods continued to be negative. It is an issue of concern. But there is a bigger story underlying this. Consumer goods is holding up to a pattern it has shown in the past year or so. It is 5-5.5 per cent. But capital goods have been coming in negative since October, barring February.

So, the capital goods index as a whole is coming poorly and over the year, it has done much poorer than what it did in 2010-11, indicating there has not been enough activity in the investment side, which is necessary for long-term growth.

Mining, too, continued to contract. What could be the reasons?
Mining growth has been negative for almost a year. Partly because of gas, earlier it was coal, but that has improved. So, mining continues to remain an area of concern. However, the principal component of concern is capital goods.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Wed, June 13 2012. 00:17 IST
RECOMMENDED FOR YOU
.