PM’s advisory council member questions IMF, WB growth outlook

While the International Monetary Fund (IMF) has lowered India’s growth forecast for the current fiscal by 0.5 percentage points to 6.7 per cent, the World Bank has pegged economic expansion at 7 per cent, down from 7.2 per cent projected earlier. The Asian Development Bank too lowered India’s current fiscal growth to 7 per cent from 7.4 per cent, while RBI cut economic growth forecast to 6.7 per cent from earlier projection of 7.3 per cent.

“IMF’s growth projections are 80 per cent wrong...World Bank’s growth projections are 65 per cent wrong,” he said in a media interaction when asked to comment on lowering of growth projections by international multilateral lending agencies. While the council has been dismissive of projections of multi-lateral lending agencies, the government does not miss an opportunity to tom-tom improvement in ease of doing business ranking by World Bank and other such improvement in indices.

Roy, who is also director of economic think tank NIPFP, however, said the council will examine causes of slowdown. India’s economic growth slipped to a three-year low of 5.7 per cent in the first quarter of the current fiscal. Replying queries at the same media interaction, Niti Aayog member and Chairman of the Council Bibek Debroy said “whether we like it or not we don’t have good data on employment.” 

“In a country like India, you cannot get good data on employment and jobs from enterprise surveys. The labour bureau enterprise surveys covers less than 1.5 per cent of total employment,” Debroy said. Noting that we can get data on unemployment and employment in India is through household surveys, he said the last NSSO household survey was out in 2011-12 and the next results of NSSO household surveys will not be available till 2018. 

The newly constituted Economic Advisory Council to the Prime Minister (EACPM) wants the government to stick to its fiscal consolidation road map and has suggested that stimulus to the industry should not be at the cost of fiscal prudence. 

The Council, which met for the first time, has identified ten themes, including economic growth and job creations, that need attention. Chief Economic Adviser Arvind Subramanian gave a presentation to the council on ways to accelerate economic growth, including investments and exports by using a combination of different policy levers. “We will come out with implementable solutions for economic problems and present them to the Prime Minister,” council’s chairman Bibek Debroy said. 

When asked whether the government can breach fiscal deficit to provide stimulus to the industry, Debroy said,” There is a consensus (among the members). that the fiscal consolidation exercise should not be deviated.”