New Delhi, Feb. 8: The Central Statistical Organisation's surprisingly low growth forecast of 5 per cent this fiscal is just an advance estimate that has a high chance of getting revised upwards when the final estimate is out, the finance ministry said today.
The statistics office's forecast is way below the estimates of the government and the RBI.
The finance ministry had forecast a GDP (gross domestic product) growth rate of 5.7-5.9 per cent for the current financial year, while the RBI had forecast a more moderate 5.5 per cent.
"In past years, advance estimates had been revised more than once. Growth was overestimated as the economy slowed in 2008-09 and 2011-12, while it is probably underestimated now," the finance ministry said in a note.
To buttress its point, the North Block quoted data which showed the statisticians had been way off the mark in most years.
In 2005-06, the CSO had forecast an 8.1 per cent growth but the final tally was 9.5 per cent. In 2006-07, the growth forecast was 9.2 per cent but it was actually 9.6 per cent.
"This is part of the dangers of forecasting… it happens. Frankly, we too feel the CSO figures will be revised later and guess the actual will be nearer 5.5 per cent," said D.K. Joshi, chief economist at Crisil.
"Its (the CSO forecast) based on trend data, reality checks may show a different result," said N.R. Bhanumurthy of the National Institute of Public Finance and Policy.
The North Block argues that the economy is on the uptick with a year-on-year increase in excise duty of 16 per cent and service tax growth of 33 per cent in April-December. Inflation has moderated to 7.2 per cent and the RBI has reduced policy rates by 25 basis points. "Lower rates will help support growth," the note says.