Indian Economy-News & Updates

[by78]

Why India Needs Better Numbers - Bloomberg View


When India reports new GDP numbers on Monday, there's likely to be cheer in New Delhi -- and not a little head-scratching. Last week, the Ministry of Statistics revised GDP figures for the financial years of 2012-13 and 2013-14 dramatically upward: Instead of growing at a tepid 4.7 percent in the year before Narendra Modi was elected prime minister, India supposedly grew at a roaring 6.9 percent pace.

Even some of the nation's most influential policymakers were taken aback by the new numbers, which were calculated using a different methodology, new sources of data and a new base year. Central bank governor Raghuram Rajan declared he wasn't ready to change his prediction for 5.5 percent growth this year, saying “I don’t want to say anything about the numbers until we understand them better." Arvind Subramanian, Modi's chief economic adviser, admitted he was "puzzled" by the new figures.

Was India sputtering under the previous, Congress-led government or booming? How should the new numbers change the government's fiscal targets, or Rajan's calculus about when and whether to cut rates? Without better confidence in the data, policymakers are obviously hamstrung in their decisionmaking.

The GDP revisions are a reminder that India faces some of the same issues with iffy data as China does. That shouldn't necessarily be the case. Apart from the Statistics Ministry, Indian data is parsed by a Central Statistical Commission, a Central Statistical Organization, a National Sample Survey Organization and an entire civil service cadre, the Indian Statistical Service. Unlike in China, too, local officials have little incentive to fudge the numbers; the central government doesn't set growth targets for them to meet.

Yet longstanding problems remain. Some involve theoretical and measurement issues, as with the revised GDP numbers. It's also extremely difficult to collect quality primary data in an economy dominated by the informal sector, where companies and individuals rarely submit sales figures and can't be forced to do so.

However expansive it is, the government's statistics machinery operates in a silo, detached from the major economic policymaking ministries. The first step in any reform process would be to mandate closer interaction between the two so that policymakers understand the methods being used and statisticians understand what the policymakers need. Needless to say, the government's leading economists should not be mystified by official GDP data. That sends a signal of deep confusion to other stakeholders in the economy. It also undermines sensible, forward-looking economic policy, which can only be formed on the basis of data which isn't misleading and is clearly understood by all.

An effort also needs to be made to eliminate unnecessary time lags in the collection and release of data. India conducts a poverty census -- crucial to framing welfare policies for the poor -- not even once every decade. According to the chairman of the Statistical Commission, the last census for below-poverty-line families covers the period between 1997 and 2002. India has likely lifted hundreds of millions of people out of poverty since then, yet has no accurate measurement of that number. In effect, welfare policies are based on back-of-the-envelope calculations and guesswork.

Similarly, quarterly GDP data is released at least six weeks after the end of the quarter in question. Inflation data is released every month. Ideally, the Reserve Bank of India needs data on both indicators at a similar frequency to set monetary policy.

The challenge of collecting data from the informal economy -- which contributes almost 50 percent of GDP and employs 90 percent of India’s workforce -- is more complex. The size of the bureaucracy dedicated to statistics means that there are presumably enough people employed in data collection. Still, it would make sense to outsource some of that job to private companies if they have better and quicker methods of collecting data than an inherently rigid government bureaucracy. In some cases, private-sector companies should be allowed to compete with government agencies in collecting and interpreting data.

If India is serious about becoming an economic superpower, it needs to work harder to create a world-class statistical system. Good numbers are welcome. Timely, accurate data is indispensable.

To contact the author on this story:

Dhiraj Nayyar at dhiraj.nayyar@gmail.com

To contact the editor on this story:

Nisid Hajari at nhajari@bloomberg.net

 

[by78]

Truth, damned truth and statistics | The Financial Express


Truth hurts. The UPA governments wasted the opportunity that was provided in May 2004 by the outgoing NDA government, which had put the Indian economy on the growth path. The last year of the Vajpayee government, 2003-04, was the best ever—not just reckoning the years since 1947 but even going back to the last century, to the years of the East India Company, to the reign of Akbar and Ashoka, and to the time when our forefathers had discovered Pythagoras’ Theorem, mastered the art of organ transplant and flew aircraft to other planets.

We must forget the past. Memories are dangerous in a democracy. We must filter memories through the prism of our individual or political preferences to create our perceptions.

Let us begin by forgetting the GDP numbers between 2004-05 and 2011-12. Let us tell the people that GDP is an imperfect measure, that growth collapsed in 2008-09, that the economy has not yet recovered, and that Achche Din Aanewale Hain. Let us tell the people that China achieved the best growth rate during the last 10 years and that means India achieved the worst growth rate. Since India is incomparable, there is no need to bother about the other countries.


Let us forget that Lehmann Brothers collapsed in September 2008 triggering what is now called the Great Recession. Bankruptcy is not an uncommon event, so what is the fuss about? Let us tell ourselves that the Great Recession was a period of growth and it was, after all, only the Great Recession and not the Great Depression of the 1930s. Yet the UPA government could record only growth rates of below 5% in 2012-13 and 2013-14. (It has been since revised by a fellow called Anant to 5.1% and 6.9%, respectively.)

Let us not fool ourselves that a jump in the growth rate from 5.1% to 6.9% was a ‘recovery’. Let us also forget that the average rate of growth during the 10 years of UPA was 7.5% (or 7.7% according to that fellow Anant). It was the highest decadal growth since independence. So what?

We achieved higher growth rates during the Vedic period and that was conclusively proved in a paper published at the Indian Science Congress.

It will be reaffirmed in a paper that will be presented at the next Indian Mythology Congress. Anyway, 7.5% or 7.7% is still lower than the 7.9% achieved by the NDA government in 2003-04. No matter that the former is the 10-year average and the latter is for only one year. It is easier to trumpet a solitary number than an average because people like an uncomplicated number.

Let us forget the data that shows that:

* food grain production increased from 212 million tonnes in 2003-04 to 264 million tonnes in 2013-14;

* installed capacity of power generation utilities jumped from 112,683 MW in March 2004 to 243,028 MW in March 2014;

* tele-density rose from 7 per 100 persons in March 2004 to 75 per 100 persons in March 2014;

* whatever be the starting point, the poverty ratio declined by at least 15 percentage points.

That fellow Anant’s data also shows that, during the UPA’s tenure, government expenditure as a percentage of GDP actually decreased. Public debt as a proportion of GDP came down from 61.1% in 2003-04 to 49.4% in 2013-14. The current account deficit had been contained at 1.7% of GDP. The fiscal health of the country at the end of March 2014 was good, maybe even robust. The share of manufacturing in GDP was 17.3%, and not 12.9% as was believed. Mining and manufacturing were wrongly assumed to be contracting in 2013-14, while they actually grew at 5.4% and 5.3%, respectively. ‘Make in India’ was already underway.

Let us forget that the UPA brought new ideas to the table, such as nutrient-based subsidy for fertilisers, Aadhaar and Direct Benefit Transfer. It drew the blueprint for growth-enhancing reforms such as Goods and Services Tax and Direct Taxes Code. Let us chuckle that it did not draw on its political capital (limited by the lack of an absolute majority) to accelerate their implementation.

These are inconvenient truths and are best left in the recesses of our memory. Ignore the hack who wrote the editorial that said, “The previous government did a decent job of running the economy but a lousy one of noticing it and letting the public know.”

Let the truth remain shrouded by the froth of corruption charges. Let nothing—certainly not due process—come between ‘being called a witch’ and ‘being burned at the stake’.

Truth be damned. And statistics are lies.

It is time to give marching orders to Anant—following Avinash Chander and Sujata Singh.

By P Chidambaram

 

[dray]

@DRAY and others here.

I've heard that Raguram Rajan (RBI director) express his opinion that the revised economic growth figures to be puzzling.

What herefers to is that macro economic factors on the face of it, seems to indicate sluggish growth, though the new figures seem to say India is growing fast.

Rajan just said that he needs to look into the numbers before commenting, and RBI gets its key data on a quarterly basis, things will be clearer by April.

However, I don't think there is anything wrong with the new numbers, though some other figures ars weak, but our internal consumption seems to be stronger than expected. Also read this post: BBC: India growth figures baffle economists | Page 4

 

[Beidou2020]

13 th thread by him already on it.

Guess the identity and motive of this poster.

Considering that India overtook China, its pretty big news. China has been relegated to 2nd place and now India is the leader of the BRICS and emerging world.

13 threads is probably not enough.

 

[Chronos]

Rajan just said that he needs to look into the numbers before commenting, and RBI gets its key data on a quarterly basis, things will be clearer by April.

However, I don't think there is anything wrong with the new numbers, though some other figures ars weak, but our internal consumption seems to be stronger than expected. Also read this post: BBC: India growth figures baffle economists | Page 4

thanks for the link, also, India has a shadow economy that is as big as the official economy.

Still, India needs to add more industrial growth, especially going upwards in the value chain.

 

[anilindia]

Economic growth in India firming up: OECD - The Economic Times

 

[black-hawk_101]

Why not they take refined fuel lines from KSA through Oman-Pakistan then to India and also Refined gas from Qatar through KS-Oman-Pakistan and then to India.

 

[kadamba-warrior]

Considering that India overtook China, its pretty big news. China has been relegated to 2nd place and now India is the leader of the BRICS and emerging world.

13 threads is probably not enough.

If you want to question the growth rates, please counter it logically - even I want to know and am ready to be educated. But why this sarcasm? You guys only make it sound as if China can never be overtaken! Get off your high horse.

And India didn't overtake China, so calm down! We are only talking about growth rates. Unless you deliberately missed that part just to be able to troll, of course!!

 

[cloud_9]

 

[Chanakya's_Chant]

 

[IndoCarib]

GE to use new India manufacturing facility as export hub| Reuters

Feb 14 (Reuters) - General Electric Co will use its new manufacturing facility in India, which was formally inaugurated on Saturday, as an export hub, with plans to send half of its output to the conglomerate's global factories.

The 67-acre plant in Chakan, near the western city of Pune, is GE's first multi-purpose manufacturing facility in India, which will produce a range of products that will include aviation, rail and diesel engines

 

[Echo_419]

GE to use new India manufacturing facility as export hub| Reuters

Feb 14 (Reuters) - General Electric Co will use its new manufacturing facility in India, which was formally inaugurated on Saturday, as an export hub, with plans to send half of its output to the conglomerate's global factories.

The 67-acre plant in Chakan, near the western city of Pune, is GE's first multi-purpose manufacturing facility in India, which will produce a range of products that will include aviation, rail and diesel engines

I hope the Americans invest more in Electronics too

 

[Echo_419]

Swachh Bharat Abhiyaan: Government builds 7.1 lakh toilets in January - The Economic Times

Slowly & Steadily we are reaching there

 

[luckych]

Aerospace facility in Bengaluru - The Hindu

German aerospace material and logistic provider ThyssenKrupp Aerospace is setting up its first facility in the country at the Aerospace Special Economic Zone near Devanahalli in Bengaluru. The company did not disclose the investment amount.

According to senior officials of the company, the new facility will be spread across 3,300 sq m and will stock a range of aerospace materials such as aluminium, titanium and steel. “The new facility will offer supply-chain management to suppliers of original equipment manufactures. It will help us strengthen our global footprint and further expand our presence in the Asia Pacific region. Our aim is to meet the rising demand of local aerospace industry,” said Jurgen Funke, president, ThyssenKrupp Aerospace.


ThyssenKrupp Aerospace is setting up its first facility in the country

 

[Bang Galore]

Coal Auction: Aggressive Bids Suggest People of India Scammed for Years – NDTV Profit
Coal Auction: Aggressive Bids Suggest People of India Scammed for Years



Indian metal and cement companies have bid aggressively for coal blocks in the country's first auction to sell mines - of the 19 blocks currently on offer, 14 have already sold for nearly Rs. 80,000 crore.

In 2012, in a body blow for the Congress-led government of Dr Manmohan Singh, the national auditor (CAG) said that the lack of a transparent bidding process in mining rights had cost the country a swindle worth Rs. 1.86 lakh crore. The bids so far suggest the sales proceeds will zip well past that estimate.

"CAG's stand on coal auction has been vindicated," said Commerce Minister Nirmala Sitharaman.

The auction comes after the Supreme Court last year ordered the cancellation of nearly 200 mining licenses issued by successive governments since 1993. The government had said it expects to raise Rs. 15 lakh crore from the new bidding process. The second round of auctions will include 43 blocks from February 25 to March 5.

Companies who are bidding for the licenses want to cut imports and slash their dependence on inefficient government monopoly Coal India Ltd. The companies are allowed to bid for enough coal to fuel a 50 per cent expansion of their current metal or cement capacity.

The companies have declined to comment on the auctions until the whole process is complete.

Most of the winning bids so far have been higher than analysts' expectations based on the benchmark price of state-run Coal India.

Coal India's prices are set according to cost rather than based on supply and demand in the market and its costs are high at Rs. 1,118 per tonne, more than half of which comes from employee and social costs.

For the private companies, mining costs are likely to be between Rs. 400 and Rs. 600 per tonne, according to some analysts.

The entire sum raised from the auction will be collected by the government over a period of 30 years. Five per cent of the proceeds will be accrued to the government in this fiscal year.

Vinod Rai has last laugh over Manmohan Singh: Coal auction bids vindicate CAG loss figures

The former Comptroller and Auditor General (CAG), Vinod Rai, has good reason to feel vindicated by the ongoing coal block auctions. After just four days of bidding for the initial lot of 21 coal mines on offer, the offers have already crossed Rs 60,000 crore, with the bulk of it (Rs 52,610 crore) going to the six key coal bearing states of Madhya Pradesh, Chhattisgarh, West Bengal, Odisha, Maharashtra, and Jharkhand. The rest of the money will come as royalty over the lifetime of these mines.

And remember, the auctions are not yet done - there are a total of 204 blocks to be auctioned. The current numbers involve only 21 blocks.

According to BusinessLine, as against the overall expectation of Rs 15 lakh crore expected to be garnered over the life of all 204 mines on the block, the chances are the actual numbers will be much higher.



Vinod Rai must be wondering why he was so apologetic in estimating a loss of only Rs 1,86,000 crore from handing over these mines free to public and private sector parties.

In fact, then Prime Minister Manmohan Singh, who was coal minister when most of these blocks were allocated, will have egg all over his face. He told parliament in August 2012 that CAG’s estimates were wonky. Singh said Rai’s way of computing losses to the exchequer (or “undue gains” to the allottees) was wrong, as he assumed then loss to be the “difference between the average sale price and the production cost of Coal India Ltd (CIL) of the estimated extractable reserves of the allocated coal blocks”.

The four reasons he gave for slamming Rai’s estimates were, as noted by Firstpost at that time, the following:

First, “computation of extractable reserves based on averages would not be correct.”

Second, “the cost of production of coal varies significantly from mine to mine even for CIL due to varying geo-mining conditions, method of extraction, surface features, number of settlements, availability of infrastructure, etc.”

Third, CIL has been generally mining coal in areas with better infrastructure and more favourable mining conditions, whereas the coal blocks offered for captive mining are generally located in areas with more difficult geological conditions.”

Fourth, “a part of the gains would in any case get appropriated by the government through taxation and under the MMDR Bill (Mining and Minerals Development and Regulation Bill) presently being considered by the parliament,” under which “26 percent of the profits earned on coal-mining operations would have to be made available for local area development.”

Without disputing the technical nature of the PM’s rebuttal, the ongoing coal mine auctions prove beyond a doubt that not only was Singh wrong on all counts in spirit, but Vinod Rai may have been extra-conservative in his assessment of the value of coal blocks allotted for free by Manmohan Singh and previous governments.

This proves two things: the coal scam was for real, and not a figment of Vinod Rai’s imagination; and two, the assumption that auctions will scare away private bidders have been proved conclusively wrong.

In fact, Rai has been proved right even on the 2G scam.

The Congress party crowed in 2012 after the 2G spectrum auctions partially flopped due to “high” reserve prices, indicating that Rai’s loss estimate in A Raja’s flawed allocation policy may be wide off the mark.

"Mr CAG, where is the Rs 1,76,000 crore?" asked Manish Tewari, Minister for Information and Broadcasting in UPA-2, at that time. Communications Minister Kapil Sibal, famous for his zero-loss theory, was cock-a-hoop. “It is dangerous to look at the situation in 2010 and relate it to 2008," he said, criticising Rai for his high presumptive loss figures.

We now know the answer. Every spectrum auction held after 2012 has produced a revenue bonanza for the government without raising telecom tariffs by unreasonable amounts. The next one, involving the sale of spectrum in the 800 Mhz, 900 Mhz, 1,800 Mhz and 2,100 Mhz bands, due in March, is expected to generate nearly Rs 1,00,000 crore in overall revenues – a quarter of this for this year itself.

The Rs 1,76,000 crore estimate of CAG was not off the mark at all.

And now, the ongoing coal auction suggests that Vinod Rai may, if anything, was guilty of pulling his punches when he wrote his spectrum scam and Coalgate reports.

Vinod Rai has last laugh over Manmohan Singh: Coal auction bids vindicate CAG loss figures - Firstpost

Coalgate Proves Real, as Auction Yields Bonanza
By The New Indian Express


A bonanza seems to be in store for the government, with the auction of coal mines yielding results, way beyond its expectations. With just four days of bidding for the initial 21 coal mines, the offer has already crossed `60,000 crore, of which `8,000 crore will be by way of royalties. Altogether, there are 204 blocks to be auctioned and, at this rate, the whole bidding process is expected to yield a revenue, which will be several times the amount already in the kitty. The success of the auction proves the then Comptroller and Auditor General of India (CAG), Vinod Rai’s estimate that the Coalgate scam had caused a revenue loss of `186,000 crore was not wide of the mark.

In retrospect, if at all the CAG had erred in his estimates, it was in underestimating the loss, rather than in overestimating it. When he claimed at that time that by handing over these mines virtually free to private and public parties, the state had suffered a huge loss, he was lambasted by those in power for talking through his hat. Even then prime minister Manmohan Singh had taken pains to pick holes in his estimate to deny that there was a scam. The success of the auctions proves that the coal scam was not a figment of Rai’s imagination.

The success also knocks the bottom out of the claim that the auctions would scare away private bidders. Far from that, private parties have enthusiastically participated in the bidding but for which so much money could not have been generated. Instead of accepting the wisdom contained in Rai’s reports and rectifying the mistakes and thereby serving the national interest, the government saw him as a fall guy. He earned the then government’s displeasure when he calculated the loss the exchequer suffered because of the 2G Spectrum scam. Every auction held since 2012 proved him right, as the government obtained a bonanza from it. The next auction, due in March, is expected to raise `100,000 crore. Incidentally, these auctions have not even raised the telecom tariffs.

Coalgate Proves Real, as Auction Yields Bonanza -The New Indian Express