Even a common man on the street will today tell you that the Indian economy is going through tough times. For him, the economy might mean his day-to-day expenses but that more or less, in a nutshell gives us a synopsis about the economy, doesn’t it? Right from the finance minsiter to the ex-RBI Governor, all have made a downward revision of their growth rates for the current fiscal and the average, based on consensus is not above 8%. So given this background, it came a shocker to see the over optimistic estimation of Centre for Monitoring Indian Economy (CMIE), which in its monthly report has stated that the Indian economy would continue to clock more than 9% growth in the current fiscal.
The report states that CMIE had predicted a growth of 9.1% in its first forecast in February 2008, which was revised up to 9.5% in June 2008 and now it has been revised to 9.4% in FY09. Err, are they looking at the same economic numbers that we all have or are they looking at some other economy? Cannot help but wonder when we see this over-the-top estimation. Somehow, it makes you wonder about how they have arrived at these numbers and seems more like a joke, espeically given the fact that other, more reliable predictions have indicated a slowdown.
RBI has predicted the real gross domestic product (GDP) to grow by 8%, while the Prime Minister’s Economic Advisory Council (EAC) has also projected a 7.7% economic growth in FY09. CMIE’s upbeat estimation is “different” because it has based its caluclations on the fact tha the Index of Industrial Production (IIP) is faulty. It believes that the Wholesale Price Index (WPI) is an inappropriate measure of inflation and the Consumer Price Index (CPI) is a more appropriate measure. Also, CMIE does not consider the current inflation to be extraordinarily high as to hurt growth.
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