After India revised down its economic growth for the fiscal year 2012-13 to 4.5 percent from 5 percent earlier, Siddhartha Sanyal, chief India economist, Barclays told CNBC-TV18’s Latha Venkatesh that the revised numbers suggest that factory output data will now be in low single digits in terms of annual growth. He also adds that the downward revision does not indicate a better FY14 as it will not help growth numbers for FY14.
However, Rupa Rege, economist, Bank of Baroda believes that even though the revised numbers do not indicate any improvement but at the same time it is not indicating any deterioration either. “We have been seeing some uptick in power generation for last few months and that has also been kept this month. Otherwise, you see quite a severe deceleration especially in steel, cement and all which is quite worrisome,” she adds.
Below are the excerpts of their interview on the channelSiddhartha Sanyal, chief India economist, Barclays
Q: There is 2.1 percent rise in core sector output compared to 1.7 percent in November; what are your first thoughts?
A: This is not a very exciting number but it is perhaps a decent headline. The broad takeaway here is more often than not you would expect the overall index of industrial production (IIP) to be in low single digits in terms of annual growth and this number is perfectly inline with that.
Q: Would there be a guess on what will be the final December IIP number?
A: We haven’t done that. We will do that incorporating this but by and large, low single digit is more often than not is possibly the story for IIP.
Q: We got the final gross domestic product (GDP) numbers or the first revised number for FY13 at 4.5 percent. Is that a bit of a shocker?
A: No. This is a bit of downward revision but is something that we saw last year as well. Prior to last year’s number, they must have revised by a higher magnitude and so, FY12 number must have gone up.
Q: You are right. FY12 has gone up from 6.2 percent to 6.7 percent and hence, the downward revision in the FY13 number.
A: If you think of the first number for FY12 which has came out at 6.5 percent, from 6.5 percent it had gone to 6.2 percent and now to 6.7 percent. So, this will be the trend for all the numbers going ahead.
Q: With this revision, from 5 percent to 4.5 percent, do you suspect FY14 will start looking good now?
A: Not really, because here also the absolute number must have gone up in this case. So, this will not help growth numbers for FY14. FY13 absolute number must have gone up but by a smaller margin than FY12.
Rupa Rege, Economist, Bank of Baroda
Q: First your thoughts on this 2.1 percent core sector number. Is that good or is it pretty ignorable?
A: The print is quite inline with its past trend. I don’t think it is indicating any improvement but at the same time it is not indicating any deterioration either. We have been seeing some uptick in power generation for last few months and that has also been kept this month. Otherwise, you see quite a severe deceleration especially in steel, cement and all which is quite worrisome.
Q: Do you have an IIP number for December?
A: No, because I generally go by the leading indicators approach and today’s number would act as one of the indicators. However, going by the other leading indicators, I don’t think there is any reason to expect a very good number.
Q: The final revised FY13 number for gross domestic product (GDP) has been scaled down from 5 percent to 4.5 percent largely because the previous year’s number has been revised up from 6.2 percent to 6.7 percent. So, half a percentage point increase in the base has led to a half a percentage point fall in FY13. Is this all statistical jugglery or will it have any bearing on your FY14 number?
A: FY14 number, there have been serious issues about data integrity and credibility. This will give some temporary feel good factor which will not sustain for very long. However, we have been seeing it happening every year that previous year’s numbers always get revised downwards to show a kind of better growth.
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