In the primary sector, the data on which CSO estimates are based, there is some cause for concern. Firstly, there is a decline in the rate of growth in rabi cereals (April harvests) as well as in sugar cane, though in both cases by less than 3 per cent over the corresponding quarter of 2009/10. Hopefully, in the case of wheat, India will not experience a repetition of what happened to rice since 2008 (when despite fall in international prices, our market prices had not come down till now). However, with a disastrous Russian drought, global wheat prices are on rise, already up 60 per cent from June lows, and US and France are vying for markets ceded by Russia..

Logically wheat prices instead of softening could harden in India though we may have a good level of procured stocks at present. But we had also stocks of rice over the last two years when the market went haywire with a passive look from Government. Sugar prices - sensitive commodity — have been volatile and a reduction, even slight, in cane output could push up prices, and at this time, the Agriculture Ministry is toying with the idea of sugar decontrol. So, all in all, the outlook is not promising for Government's anti-inflation strategy through RBI.

Nor the kharif outlook can be said to be brighter, with monsoon having turned spasmodic and its spread uneven in the first eight weeks of its duration. Sowings on one side in some states while flood and drought damages in others depress the prospects as of now. A clearer picture might become available when CSO comes out with the second quarter data in November-end, when the full effect of wayward monsoon should get reflected.

GDP growth in current prices at 21.7 per cent in the first quarter highlights the level of inflation that grips the economy. CSO puts WPI increase in the quarter at 10.6 per cent (food articles 16.6 per cent, manufacturing 7.1 and electricity 77 per cent) and CPI at 13.7 per cent. Since these are relative to first quarter of 2009/10, the 'base effect' theory might be held up as the factor, but this is equally applicable to the GDP growth estimate of 8.8 per cent as against the 6 per cent in the corresponding quarter of previous year. What has pushed the growth in 2010/11 (first quarter) is manufacturing (12.2 per cent), though the industry index had dropped to 7.1 per cent in June, presaging perhaps a further slowdown. Commercial vehicles and aviation sector in services had registered significant recovery in the first quarter.

Data on consumption expenditure and capital formation show up significant weaknesses. Rates of growth in private and government final consumption as well as capital formation are mostly in marginal decline at market prices though these could pick up in the subsequent quarters. But on a comparative basis with 2009-10, when growth revived in the second quarter onwards, the data in coming quarters may not be as promising as the first quarter, again due to base effect. It would be the case if the relative slowdown in manufacturing and service sectors (other than Trade, Hotels, Transport and Communications) in the first quarter persists. Economists tend to be cautious about GDP growth in the current year exceeding 8 per cent.

Gross domestic savings and capital formation had declined to 32.3 and 34.9 per cent of GDP respectively in 2008/09 from 36.4 and 37.7 per cent in 2007-08. These rates are unlikely to have undergone any significant improvement in 2009-10. How far savings and investment respond in 2010-11 cannot be predicted, given the inflation which reduces disposable incomes in general and the ongoing monetary tightening. Added to uncertainties is the global economic outlook with deflation continuing in Japan and becoming a threat in USA, where in the midst of unemployment at 9.5 per cent, recession has not yet been officially lifted. Germany's vibrant economy is providing some support for Europe but the sovereign debt crisis looms over Greece and a few other countries in euro-zone. With emerging markets performing stronger than expected, the world economy as a whole may show moderate recovery in 2010. Global trade is unlikely to provide ballast to growth for most countries including India.

In this context, the Planning Commission has invited suggestions form public and stake-holders on how to achieve 10 per cent economic expansion in the 12th plan, “a more inclusive and robust economic growth of over 10 per cent”, as Deputy Chairman Montek Ahluwalia puts it. It is time for planners and other policy-makers to match their growth obsession with some solid data on how higher growth over a decade has been translated in terms of social development - education, health and rural infrastructure, in particular- as well as employment. Time to get over mechanical ways of doing things.

Higher growth does give governments more revenues but apart from fiscal consolidation with the kudos it may bring along for the Finance Minister, mere assumptions of progress with incremental allocations for different sectors without producing solid evidence of commensurate outcomes would not do. The Planning Commission ought to give the country a credible balance-sheet of investments and outcomes through central and state budgets every year. Such appraisals timely published would help to prioritise goals and allocations, now that its annual plan surveys of the past seems to have been given up.

Above all, the Government needs to get a firmer grip over the economy, after a series of setbacks on various fronts and Parliamentary uproar if “inclusive growth” has to be something more than a slogan. This is underlined by the latest Supreme Court direction to Government on feeding the poor rather than allow food stocks to rot in godowns or in the open. (IPA Service)