There are interesting lines of enquiry as to what the RBI could possibly do in the present domestic and international context, about a 0.5 percentage point slippage in projected output growth. We shall however set these sublime issues to one side, and focus on the mundane facts of the case. How bad is the slowdown?

We all know that the Central Statistical Organisation (CSO) has estimated this year's first quarter GDP growth at 5.8 per cent. This was of course much less than the 6.9 per cent of the previous year's first quarter, as well as way short of the 7 per cent plus that the government has been talking about. But few will surely remember that in September 1999, when the GDP numbers for the first quarter of 1999-2000 were first released, the growth rate estimated was just 5.5 per cent.

Our economic data has, like all of God's creatures, the capacity to metamorphose with the passage of time.

This business happens all of the time. Grain output in 1999-2000 was variously estimated between January and July 2000, at 199.1, 201.6 and finally 205.9 million tonnes (mt.). We have just been told that the kharif grain production this year will be 102.68 mt., somewhat short of last year's 103.90 mt. Now before you jump to conclusions about how this 1.2 per cent drop in output will effect everybody, it would pay to look up the 1999-2000 kharif estimate made this time last year. Believe it or not, it was 102.70 mt! Since oilseeds and cotton output are likely to gain by 20 and 10 per cent respectively on last year, what we actually appear to have this year is a case of tangible, albeit modest growth, not stagnation.

Let us briefly return to the issue of GDP. A fundamental revision in the GDP series done in January 2000 was mainly responsible for the 5.5 per cent figure growing into 6.9 per cent. Such a change is unlikely to be repeated. The point here is that first, the 5.5 per cent estimate did not cause the gloom in October 1999 which the 5.8 per cent figure has today. The difference is in the context. Last year this time, there was considerable positive expectation from the newly elected government, which then went on till December making a series of positive moves on economic policy. Today, one year later, the evidence of action on reform is woefully thin on the ground. Investors, financial intermediaries and commentators have tired of waiting for reforms that have been hanging fire for five years now, through several governments. Evidence gets interpreted in the light of the moment.

The second issue is more materially on the evidence itself, rather than on its interpretation. First quarter GDP figures indicate that the service sector (excluding government) grew by 7.9 per cent, relative to 7.6 per cent last year. The use of a much larger increase in the implicit deflator for service sector GDP in 2000-01 appears strange, considering that inflation in consumer prices was in fact lower in Q-l (first quarter) of this year than it was in the last. If you were to use the same increase in the deflator this year as used in the last, then Q-l 2000-01 GDP growth estimates would climb to nearly 7 per cent.

The short point is that with a "normal" monsoon, and the absence of serious external problems, the mundane labour of economic agents across India today generates 6 to 6.5 per cent GDP growth. Perhaps closer to 6.5 per cent, as long as exports do well, as they are today. This latter day variant of the Hindu rate of growth appears as impervious to the exertions of government as the original! But then this government has a chance of breaking the mould by pushing the reform agenda. This, and only this, can catalyse big investment and step up growth into the 7 per cent territory. Evidence? Just check how investment is moving into telecommunications - the only infrastructure sector to have experienced extensive reforms.

-- Saumitra Chaudhuri is economic advisor to ICRA (Investment Information and Credit Rating Agency) and editor of Money and Finance, the ICRA bulletin.