Planning Commission Deputy Chairman Montek Singh Ahluwalia on Tuesday appeared to be not in tune with the International Monetary Fund's (IMF) move to revise India's growth forecast down to 4.9 percent in 2012, saying it was not at all reasonable because that would imply that the economy would decelerate further.
"I believe that the growth rate is around 5.5 percent, and, I don't believe that for the year as a whole 4.9 (percent) is reasonable because that would imply that the economy will further decelerate," he told mediapersons here.
Ahluwalia said that the IMF's India's growth forecast was the result of a bit of statistic problem.
"The measurement of GDP on the supplier side is really done in terms of GDP at factor cost. The IMF because it has global model which depends on aggragate demand uses GDP at market prices. In the second quarter results that were recently released, there is a big difference in the growth rate between GDP at factor cost and GDP at market price. The reason is that there was a big increase in subsidy payment in that year," said Ahluwalia.
"Now, the GDP at market prices is just GDP at factor cost plus taxes minus subsidies. So, because of the big increase in subsidies the GDP at market cost was depressed," he added.
The IMF has cut India's growth forecast for 2012 sharply to 4.9 percent from 6.1 percent estimated in July and 6.8 percent in April, owing to "continued investment slowdown" and further deterioration in the global economy since the previous estimate. (ANI)