TCA Anant, Chief Statistician shared his views and outlook on the economy as well as gross domestic product (GDP) numbers for January-March quarter.
Wholesale Price Index (WPI) is back in the positive territory, he said.
On long-term policy event one should keep in mind when looking at the growth trajectory is the behaviour of commodity prices, which plays the big role in constant price estimates. Commodity prices had crashed in 2014-2015, said Anant.
“That crash having bottomed out and commodity prices are now hardening relative to that crash and rising slightly, the effect is to boost commodity prices and therefore sectors dependent on the commodity prices”, he added.
That will give an upward momentum to growth pressure on its own, he believes.
Below is the verbatim transcript of the interview.
Ekta: Earlier the numbers released in February, the capital formation numbers were negative for two quarters of FY17, now they are higher, could you explain that discrepancy to us?
A: At this point on the quarterly allocation of capital formation, I am not able to say a great deal more. It is dependent on the sectoral output structure which are visible because it is principally an allocation which is being made. In part, it may be a reflection of some of the index of industrial production (IIP) components which are there in capital goods and so on and so forth but at this stage, the capital formation is very much indicator driven and from the sectoral production side estimates. So beyond that, it is very hard to give more reasons than why that has happened in Q4.
Nigel: If I compare Q3 and Q4 GDP numbers, Q4 shows a much more slowdown in fact but the high frequency data like company earnings, two-wheeler sales have showed that things have picked up in February-March if I compare it with November-December. Why is this discrepancy?
A: The indicators we use from what I gathered is cement construction as revealed in IIP in Q4 is significantly lower than the cement construction in Q3, in fact the first three quarters. That is partly one of the factors behind the construction index and corporate performance in Q4 similarly on the whole from whatever data was available to us till May 20 or thereabouts, the aggregate corporate performance in Q4 is a little weaker than what come up with Q3. These are the factors which went in to Q3 compilation.
Specifically on financial services one other element which is there is that in Q3 while deposit growth was quite robust, credit growth was slow. In Q4, the deposit growth tended to show a science of not doing so much and tapered off, that has partly influenced the financial services calculation.
For full discussion, watch video...
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