Is the growth rate fixed?


Dr Pervez Tahir May 20, 2010

T he National Accounts Committee has come out with a GDP growth rate of 4.1 per cent for the current year 2009-10. This is more than the Planning Commission’s target, IMF, World Bank and Asian Development Bank projections as well as the State Bank’s expectations. The growth certainly exceeds the perceptions of the general public, stung as it is by poverty, unemployment, galloping prices, loadshedding and human insecurity. It seems that growth has out done everyone’s expectations. With the government’s credibility next to nothing, the mantra is that of manipulation, fudging and creative accounting.

Is the government, accused of continuing with the Musharraf policies, also following him in painting the economy larger than life? Manipulation would mean a dishonest interference in the working of the Federal Bureau of Statistics (FBS) to someone’s advantage. Fudging is a state when one avoids giving a straight answer. Creative accounting is done to hide what has actually been done — to benefit somebody.

All these instruments of ‘Goebblesism’ were turned into an art form by the Musharraf regime. In its first full fiscal year (2000-01), the regime fixed a growth target of 4.5 per cent. During the year in a meeting on employment situation, Musharraf showed anxiety over media reports that the target may not be achieved. His designer finance minister assured him of a positive result. However, the National Accounts Committee arrived at the provisional figure of 2.6 per cent, revised down to 2.45 per cent in the following year and to a final estimate of 2.2 per cent. Later the base change brought it further down to two per cent.

Knowing full well that military dictators seek their legitimacy in high growth, the designer finance minister had learned his lesson. First, the practice of appointing an additional secretary in-charge rather than a full secretary as the head of the statistics division was started. Second, the senior most and the extremely competent officer of the Federal Bureau of Statistics due to become its director-general was parked at the National Defence College. Throughout the period, the FBS functioned without a director-general. Having ensured maximum pliability, the bureau was subjected to the lateral interference of the economic adviser. Never again was a provisional growth rate revised downwards. The growth rate always looked up and up, until it reached a peak of 9.5 per cent in 2004- 05, revised upward from the provisional figure of 8.4. The tyranny of the arrangement increased manifold when the designer finance minister was made prime minister for his statistical achievements. Neither National Accounts Committee, nor the Annual Plan Coordination Committee was allowed to announce the growth rate. The honour belonged solely to the prime minister. Till then, a thick blanket of secrecy was maintained. Prices, inflation and poverty also became part of the witchcraft.

In whose interest has the latest ‘fudging’ taken place? There is no evidence that the political level of the government made any attempt to influence the FBS. Its legitimacy does not lie in high growth. In any case, they are too busy in other ‘wars’ to meddle with the arithmetic of growth. The fact of the matter is that government economists themselves are disputing the 4.1 per cent growth rate. What is most amusing is that the witch doctor, now safely parked in an institution of you know who and writing a regular column for the very paper that had exposed his witchcraft time and again, is shouting from the rooftop against fudging and manipulation. What has happened is that the FBS has done what it must when allowed to function without interference. It has presented what it has got. It has no interest in increasing or lowering a growth rate. The presentation is shoddy but that reflects the low morale and the poor professional capacity of the organisation.

Published in the Express Tribune, May 21st, 2010.

COMMENTS (3)

amer sial | 10 years ago | Reply Dr. sahib is right the previous regime did an amazing thing when it reduced the poverty by a whopping double digit in one year. FBS has professional staff but it needs professional management so that people can trust their data. Hopefully the autonomy to the bureau will help it cure its ills.
Fahad Hasan | 10 years ago | Reply Political government has appointed incompetent persons as Principal Economic Adviser and Chief Economist. These two persons made mokery of the whole episode. They first approved a number and then publicly raised concerns about this number. I don't see anything wrong with GDP growth at 4.1% even if it is based on estimated data for 3-6 months. The data could have revised by correcting errors in just few hours. It is unfortunate that the political government is again in the line of fire for second year in a row for allegations like fudging. Last year the government back-tracked by lowering the GDP number. The same methodology is being repeated this year which implies that same mind is behind the event.
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