Yup bunch of anti-nationals here have no idea this was expected (delayed impulse loading on GDP). They will of course ignore the long term analysis which is still ongoing (impact of higher tax base, formalisation and NPA resolution) as result of demonetisation....not to mention the massive (much much worse than a 1% quarterly drop in growth rate) problems/corrections that would have to occur in future if it was not done
Also remember these idiots said that growth will drop to below 3% some even said below 1%.
lol to the point
No matter fastest or not, China is still adding entire indian GDP every 3 years.
Western China, the poorest region in China, is a 2 trillion dollar economy growing at 8%.
good for you glad your population is thriving...
https://www.forbes.com/sites/timwor...ot-a-general-slow-down-to-blame/#41b87b8c4801
When we look at economy-wide statistics we need to be really rather careful to think about what they are actually telling us. It's no good reifying something like GDP growth. Sure, we want to have GDP growth, that means the country and the people are generally getting richer. But we do need to be careful that we don't make this our sole and single goal. For there are subtleties to how we record GDP. The most obvious one is that if there's some massive disaster then the rebuilding afterwards increases GDP. But our measure doesn't take account (because it is "gross" not "net") what was lost through the initial damage. So, when India records slightly lower GP growth of 7.1% for the most recent reported quarter we want to root around in the undergrowth of the statistics in order to see what's going on. It could, of course, be that the general growth rate is falling. That would not be a good thing. Or we might find that there's a few little details which make it look as if that general rate is falling but which don't quite mean that, or perhaps they are specific and known things which are going to reverse themselves.
As it happens here with these latest Indian GDP figures we're in the second position. We know what's causing the slowdown, some of them aren't really a slowdown and others are reversing themselves even as we discuss matters.
The figures
themselves:
India's economy grew at its slowest pace in five quarters in the April-June period, falling below expectations amid sluggish investment and farm output. That dents the prospects of hitting the 8 per cent mark for the full financial year but the government is hopeful that a bountiful monsoon and increased pay and pensions along with various structural reforms could still take growth closer to that figure.
Sluggish farm output we know about. The rains have been bad recently, output is down. We also know that the current crop is very much better as the more recent rains have been much better. This is just one of those swings and roundabouts of India being such an agriculture oriented economy. It's, in terms of GDP, self-solving. There is a manner here in which this is more important, in the determination of the inflation rate, which we'll get to.
There's also a difference between GVA growth and GDP growth. GVA being the thing we're really interested in,
not GDP:
Responding to the CSO data which revealed that India’s GDP growth slowed to six-quarter low of 7.1 per cent in April-June period of the 2016-17 fiscal, he said, “The Indian economy April-June quarter GDP growth is at 7.1 per cent, which is lower than before. The main reason is on account of higher subsidy expenditure, the net indirect taxes have gone down.”
“The slowdown is mainly because from Q1 itself, we have started releasing subsidy allocations to the food, petroleum and fertiliser side, so that is the main factor,” he added.
This is simply not unusual in any political system. Toward the end of the government financial year budgets are a little strained, payments are sparsely made. Come the beginning of the new budget year there is often what we might call a splurge of government spending. Given the way that the Indian subsidy system works such subsidies are a subtraction from GDP. It would not surprise at all to see that Q1 each financial year suffered from such a drag on GDP as compared to GVA (GVA being calculated before the effects of indirect taxation and subsidies).
Further:
However, a slightly different measurement of economic activity, gross value added (GVA), showed the economy picked up by 7.3% in the June quarter from 7.2% a year ago.
GDP is arrived at by adding net indirect taxes to GVA. Net indirect taxes is calculated by deducting subsidies from gross indirect tax collections.
GVA is what we're really interested in as that's the gross value added. Value added is, of course, equal to the value that can be consumed. That last step to GDP is really telling us something about how that value add is being allocated. Subsidies might be a good way, might be a bad way, but that's a second order detail compared to the first order one of simply desiring that there can be more value add which can be allocated.
Which brings us to the final reason I wouldn't be all that worried about this minor slowdown. The numbers being reported are of course all real numbers, not nominal. That is, we're already taking account of the inflation rate here. And that consumer inflation rate is above target - up over 6%. However, here we come to another affirmation of the manner in which India is still a poor country. That inflation rate is largely (and it is, much more than 50% of the current rate is to do with food and food inputs) to do with food prices. Reflecting both the importance of agriculture in the economy as a whole and also food itself in the budget of the average Indian. But we know that food prices are up, sometimes by more than 100%, as a result of the lackadaisical rains recently. And we also know (we're already seeing red onions move from where consumers might need to be subsidised to where producers are being subsidised) that rains in the current growing season have been much better and that food prices are about to come crashing down again. So much of what is causing this slowdown is about to go away of its own accord.
It's still unlikely that the annual target of 8% GDP growth will be hit but it's unlikely that it will be missed by far.
