Guesstimates, anyone? The jury is in—but it's a mixed verdict. For while the projections for the Indian economy, issued by the three apex chambers of the country -- CII, FICCI, and Assocham -- in May, snapped closely at the heels of Budget 1997, each struck a different chord.

Consider the cacophony of corporate reactions: while the CII struck the high note predicting a buoyant eight per cent GDP growth in 1997-98, FICCI growled warningly, projecting 6.5 per cent as a more realistic target, while ASSOCHAM struck the middle ground at seven per cent.

The discordant data was particularly disconcerting for industry watchers, who saw projections for industrial growth rate swinging from 12 per cent for the CII to a more sluggish 9.7 per cent from Assocham, to the middling 10.5 per cent from FICCI. On the flip side, doubts over the normalcy of Monsoon 1997 sowed suspicion in the agricultural growth rates too, which swayed between 4.5 per cent for Assocham to a worst case scenario of three per cent from FICCI.

The corporate planner's dilemma: Decisions ride these days more than ever on the information that supports them. The most important information is related to projections. Every decision must be backed by a view taken on some future development or the other.

So, when there is a cacophony of conflicting projections, what is a corporate planner to do? "Take it with a pinch of salt," says Ranjit Puri, CMD of the Rs 300-crore The Saraswati Industrial Syndicate Ltd, led by flagship Indian Sugar & General Engineering Corporation. Admits R C Bhargava, managing director, Maruti Udyog Ltd, "We don't go by their projections anyway."

Take the GDP growth rate for example. Insisting that eight per cent is a conservative estimate, Puri adds: "I know, roughly, what eight per cent growth for the economy corresponds to in my companies and I am certainly looking for higher than that.''

Pointing out that MUL's targets are set primarily on the basis of its production capacities rather than economy forecasts, Bhargava says, "These projections may give a general sense of what direction the market will take and the general health of the economy. But every corporate has to do its own homework and market research."

However, if currently, the estimates trotted out by the chambers are only as good as a weathervane—providing only direction but not coordinates for growth—the lack of faith lies in the manner in which the numbers are crunched. Says Joseph Thachil, advisor, FICCI, ``The wide variations depend on the assumptions made and the methodology adopted.'' Adds D S Mehta, advisor, Assocham, "Most of the projections are not based on any scientific data and are either intelligent guesswork or feedback from select corporates."

Usually, the in-house research teams of the chambers rely on extrapolations based on past growth trends, coupled with interjections based on current market intelligence. Both Assocham and FICCI for example—which have consistently projected a less optimistic scenario than CII in terms of the economy's fundamental macros in 1997-98—have tempered the initial euphoria after Budget 97 with time lags and gestation periods of at least eight to 12 months, before arriving at the forecast figures.

CII stresses primary data: In contrast though, what lends a tad more credibility to the CII's projections is its primary data collection. In fact, much of the bullish sentiments in CII's 1997-98 economic outlook actually reflect the optimism of CII members. That is because CII's economy outlook also takes into account the findings of the business outlook survey that it conducts among its members in the wake of the budget. This year's survey—the 47th bi-annual business outlook survey—represents the expectations of 250 respondents, a significant sample of CII's 3,000-strong membership.

Says M Roy, senior director, economic, CII: "Such projections are also a very good signal to the government while taking cognizance of the shape of things to come." That is certainly true. Very little current information: Given the paucity of current data—for example, the latest figure available for industrial production pertains to January 1997—policymakers do find the qualitative data emanating from the chambers helpful in developing a more accurate, econometrics-based forecast.

Moreover, adds Dr Avind Virwani, currently senior advisor in the Ministry of Finance, "Even if the CII projects an eight per cent rate of growth, while FICCI talks of a six per cent rate of growth, the data has some credibility.

Are CII members doing better? One can form the hypothesis that perhaps, the segments CII represents are doing better than those that FICCI represents. Another piece of information which emerges is that expectations have certainly changed compared to last year, which is also good news."

In fact, the chambers are the first to admit that one of the aims of such forecasts are to motivate the members. So, while last year, the CII came close in terms of forecasting the rate of growth in GDP (seven per cent against an actual of 6.8 per cent), savings (26 per cent against an estimated actual of 26 per cent) and agriculture (three per cent against an actual of 3.7 per cent), its predictions on exports (25 per cent against an actual of four per cent) and imports (26 per cent against an actual of six per cent) were more in the nature of wishful thinking. Shrugs Roy, "Finally, it is up to the company to have confidence in which apex body it believes in." In other words: caveat emptor.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.