The current phase of growth slowdown is traced to the year 2011-12 when, going by the CSO data, GDP growth decelerated sharply to 6.2% from 9.3% the previous year; led by the near-collapse of manufacturing sector to 2.3% from 9.7% in 2010-11. Experts built up a near-consensus view that the slowdown was largely domestic in nature; the hypothesis that gained currency was policy paralysis in government as the core concern. Governments defense that slowdown was triggered by external factors had no takers as CSOs first revised (1st RE) data revealed the fall was largely concentrated in mining, manufacturing and infrastructure sub-sectors, which had become the victim of governments policy inaction.
The recently released second revised estimates (2nd RE), that include the results of Annual Survey of Industry (ASI) and other sources, however, seem to have turned the narrative upside down. GDP growth for 2011-12 was scaled up to 6.7% in 2nd RE, from 6.2% in the 1st RE that was published in January 2013. An upward revision of ½ a percentage point is not a big deal, going by past revisions. And if one were to factor in the 40 bps downward revision in the final data for 2010-11, from 9.3% to 8.9%, the net revision could in fact be minimal.
This could lead most to gloss over these numbers and revisions and move on. But the real story lies underneath, at the sub-sector level where the scale of revisions is simply astounding! The sharp upward revision in the growth of those very sub-sectors debunks the popular policy paralysis narrative, and if any, gives some credence to the governments contention that the growth slowdown was largely caused by external factors.
Let us take the GDP components one by one and work through the revisions.
* Agriculture, which was estimated to have grown 3.6% in 2011-12 (1st RE) in January 2013, is now revised up to 5%. A 5% growth, upon an exceptional 8.6% in 2010-11, is a strong performance.
* Mining, earlier estimated to have contracted -0.06%, is now revised to show a 0.1% growth. Given court ban on mining in several states, this was no surprise.
* Manufacturing, significant for its employment linkages, has been revised a hefty 4.7 pointsfrom 2.7% growth measured as on January 2013 to a healthy 7.4% in 2011-12. Given that this came on top of an even more buoyant 8.9% growth in manufacturing sector, this