India's GDP Revisions Draw Derision!

[Providence]

IMF and World Bank go with the numbers the government gives.

No one trust the data that China gives to IMF. I have personally talked to economists who have worked there and now in academia. A proof is, IMF always comes up with multiple revisions of the GDP data as picture gets clear both for the future and past. China will never let their GDP figures to "revise".

Fact can be verified from several IMF media releases where they track GDP revisions and one just has to follow the China's revisions.



Coming to @RiazHaq arguments, its ludicrous how selectively you present facts. You mentioned just one measure (cattle poop) while GDP estimate comes from atleast thousand different indicators. What are those ? Have you bothered checking ? I personally haven't but any person who doesn't give in to emotion can see it through that argument is not full proof. At least have the gumption to list the parameters.

Then you talk about how lot of western countries are buying the dubious claims of india's revised GDP estimates but don't go into their arguments at all but you chose to cherry pick again a morgan stanley? official (happens to be an indian) and goes into the detail of her/his concerns and opinion which supported your argument.

There is intellectual dishonesty at so many levels that I feel like laughing seriously. (not just emoticonally if there is such a word)

You are like sennheiser and his ilks. Constantly churning out horse cr@p against a country sitting in a garage with a Pentium4 computer.

 

[TopCat]

So the Chinese statistics also provided by Chinese to IMF and World Bank?

Yes

 

[RiazHaq]

India survives on large external capital inflows in the form of investments and debts in the post-Cold War era with the West boosting India against China and Pakistan.

Indian economy would collapse without such inflows.

Read the following to get a sense of the magnitude of foreign capital inflows in India:

"Strong capital flows to India in the recent period reflect the sustained momentum in domestic
economic activity, better corporate performance, the positive investment climate, the longterm
view of India as an investment destination, and favourable liquidity conditions and
interest rates in the global market. Apart from this, the prevailing higher domestic interest
rate along with a higher and stable growth rate have created a lower risk perception, which
has attracted higher capital inflows. The large excess of capital flows over and above those required to finance the current account deficit (which is currently around 1.5% of GDP) resulted in reserve accretion of
$110.5 billion during 2007/08. India’s total foreign exchange reserves were $308.4 billion as
of 4 July 2008."

http://www.bis.org/publ/bppdf/bispap44m.pdf

"Gross capital flows have increased nearly 22 times from $42.7 billion in 1991-92 to over $932.3 billion in 2010-11. As a share of GDP, this amounted to an increase from 15.5% in 1991-92 to 55.2% in 2010-11. Much
of the increase in financial integration occurred between 2003-04 and 2007-08. Given the
impressive economic performance indicated by close to 9% growth rate, higher domestic
interest rates and a strong currency, India's risk perception was quite low during 2003 to 2007.
Furthermore, this period was associated with favorable global conditions in the form of ample
liquidity and low interest rates in the global markets—the so-called period of Great Moderation."


http://www.adb.org/sites/default/files/publication/30234/management-capital-flows-india.pdf

 

[definitelynotIndian]

India survives on large external capital inflows in the form of investments and debts in the post-Cold War era with the West boosting India against China and Pakistan.

Indian economy would collapse without such inflows.

Read the following to get a sense of the magnitude of foreign capital inflows in India:

"Strong capital flows to India in the recent period reflect the sustained momentum in domestic
economic activity, better corporate performance, the positive investment climate, the longterm
view of India as an investment destination, and favourable liquidity conditions and
interest rates in the global market. Apart from this, the prevailing higher domestic interest
rate along with a higher and stable growth rate have created a lower risk perception, which
has attracted higher capital inflows. The large excess of capital flows over and above those required to finance the current account deficit (which is currently around 1.5% of GDP) resulted in reserve accretion of
$110.5 billion during 2007/08. India’s total foreign exchange reserves were $308.4 billion as
of 4 July 2008."

http://www.bis.org/publ/bppdf/bispap44m.pdf

"Gross capital flows have increased nearly 22 times from $42.7 billion in 1991-92 to over $932.3 billion in 2010-11. As a share of GDP, this amounted to an increase from 15.5% in 1991-92 to 55.2% in 2010-11. Much
of the increase in financial integration occurred between 2003-04 and 2007-08. Given the
impressive economic performance indicated by close to 9% growth rate, higher domestic
interest rates and a strong currency, India's risk perception was quite low during 2003 to 2007.
Furthermore, this period was associated with favorable global conditions in the form of ample
liquidity and low interest rates in the global markets—the so-called period of Great Moderation."


http://www.adb.org/sites/default/files/publication/30234/management-capital-flows-india.pdf

Capital inflows are essential for developing economies to grow. Have you forgotten about China? How much FDI China received in last 2 decades? Way much more than India about 10 times more I would guess. Pakistan doesnt get much FDI and how is your economy doing? So saying economy would collapse without capital inflows is the same as saying you would die if you dont eat food. So you dont score any brownie points here. Sorry!

 

[SarthakGanguly]

India's Economic Growth Will Overtake China's This Year, IMF Says
Stuck in low global growth and India overtaking China – is this the 'new normal'? | Business | The Guardian
FIIs betting on India's all-round growth; IMF, World Bank forecasts add to the appeal - The Economic Times
India to surpass China in economic growth - Mar. 23, 2015
Ahead of IMF Meet, Lagarde Says India Growth Bright Spot - NDTVProfit.com

All the world including IMF, World Bank etc.. is wrong and @RiazHaq is right.

I would not even go further than this on refuting RiazHaq's jealousy filled posts via his inconsequential blog.



Unless you people are Arabs, Vedic mathematics is legacy of people residing both in present day India and Pakistan. For your information Vedic mathematics has origins in Indus valley civilization.

Indian mathematics - Wikipedia, the free encyclopedia

Please don't spoil this with facts. Please.

@RiazHaq Please continue.

Capital inflows are essential for developing economies to grow. Have you forgotten about China? How much FDI China received in last 2 decades? Way much more than India about 10 times more I would guess. Pakistan doesnt get much FDI and how is your economy doing? So saying economy would collapse without capital inflows is the same as saying you would die if you dont eat food. So you dont score any brownie points here. Sorry!

Please dude...no facts pls.

You forgot to mention it was used a thousand years ago. Will you criticize German and Brits that they've abandoned the practises of their celtic ancestors? Perhaps you'll rant that those darned Arabs aren't riding camels and eating lizards like their predecessors used to do? Will you one day make a trip to Japan and ask why they have forsaken the glorious past of the Samurai?

@ito - Please get this info seriously. Pakistanis have by and large rejected the pre Islamic history, except for bragging rights. Please respect that right. They have...let's call it - 'progressed'. Nurturing our culture/tradition is our duty, like the Japanese and Chinese have kept theirs.

 

[Rau]

You forgot to mention it was used a thousand years ago. Will you criticize German and Brits that they've abandoned the practises of their celtic ancestors? Perhaps you'll rant that those darned Arabs aren't riding camels and eating lizards like their predecessors used to do? Will you one day make a trip to Japan and ask why they have forsaken the glorious past of the Samurai?

Atleast read or understand what is Vedic Mathematics ...then criticize it....it is just one of the method to do calculation just like Abacus.
for your reference....
http://www.vedamu.org/Veda/1795$Vedic_Mathematics_Methods.pdf

 

[RiazHaq]

Capital inflows are essential for developing economies to grow. Have you forgotten about China? How much FDI China received in last 2 decades? Way much more than India about 10 times more I would guess. Pakistan doesnt get much FDI and how is your economy doing? So saying economy would collapse without capital inflows is the same as saying you would die if you dont eat food. So you dont score any brownie points here. Sorry!

China's rise was driven mainly by export surpluses, not massive deficits, the kind of deficits India continues to run.


Listen to Dr. Ghosh on JNU. She says:

1. Talk of Chinindia is nonsense. China and India are two very different countries with different histories. India has never done the hard work of basic reforms that China did decades ago. Unlike India, early reforms combined with greater state control on the economy have helped China achieve rapid and massive reduction in poverty.

2. Unlike China, India does not run any trade surplus or current account surplus to fund its growth. In fact, India has been running significant twin deficits. India depends much more on foreign investments for its growth than China.

3. Although large number of Indians estimated at 110 million have been the main beneficiaries of India's rapid economic expansion, their numbers are only about 10% of India's 1.1 billion people. The growth has excluded the rest of the 90% of the population, leaving them in abject poverty.

4. Instead of fighting against economic injustice, people are being divided along ethnic, religious and caste lines. There is an increase in all kinds of unpleasant social and political forces in India, where people are turning against each other, against linguistic, caste and faith groups, because they can't hit at the system—it's too big. So they pick on somebody their own size, or preferably smaller.

Haq's Musings: BRIC, Chindia and the Indian Miracle

 

[definitelynotIndian]

China's rise was driven mainly by export surpluses, not massive deficits, the kind of deficits India continues to run.


Listen to Dr. Ghosh on JNU. She says:

1. Talk of Chinindia is nonsense. China and India are two very different countries with different histories. India has never done the hard work of basic reforms that China did decades ago. Unlike India, early reforms combined with greater state control on the economy have helped China achieve rapid and massive reduction in poverty.

2. Unlike China, India does not run any trade surplus or current account surplus to fund its growth. In fact, India has been running significant twin deficits. India depends much more on foreign investments for its growth than China.

3. Although large number of Indians estimated at 110 million have been the main beneficiaries of India's rapid economic expansion, their numbers are only about 10% of India's 1.1 billion people. The growth has excluded the rest of the 90% of the population, leaving them in abject poverty.

4. Instead of fighting against economic injustice, people are being divided along ethnic, religious and caste lines. There is an increase in all kinds of unpleasant social and political forces in India, where people are turning against each other, against linguistic, caste and faith groups, because they can't hit at the system—it's too big. So they pick on somebody their own size, or preferably smaller.

Haq's Musings: BRIC, Chindia and the Indian Miracle

The export surpluses didn't come out of thin air. Foreign companies came in with the capital, set up factories and did the manufacturing. If capital from foreign companies is so bad why so hyped about Xinping's announcements?

 

[RiazHaq]

The export surpluses didn't come out of thin air. Foreign companies came in with the capital, set up factories and did the manufacturing. If capital from foreign companies is so bad why so hyped about Xinping's announcements?

So where are India's trade surpluses after more than trillion dollars in FDI? Why haven't they materialized?

Haq's Musings: Soaring Chinese Imports and Twin Deficits Worry India

 

[definitelynotIndian]

So where are India's trade surpluses after more than trillion dollars in FDI? Why haven't they materialized?

Haq's Musings: Soaring Chinese Imports and Twin Deficits Worry India

India exports a lot of services. Make in India campaign has just started. Many companies like Airbus, Cisco have planned investments worth billions of dollars in India. India will become a manufacturing hub in coming years. Thank you for your concern

 

[RiazHaq]

#India Worst performing stock market? This is the end of the Modi bubble for FIIs

Is PM Narendra Modi running out of luck? He had famously boasted being a lucky Prime Minister while seeking votes during the Delhi elections. The context, of course, was international oil prices had less than halved and that seemed to have brought all round uptick in economic sentiment, what with the stock markets soaring to new highs early 2015. Consensus among global FIIs was that they will remain overweight India as compared to other markets like China, Brazil, South Korea, Taiwan and Russia. But everything seems to be reversing over the past month and a half.
Suddenly the FIIs, with a cumulative investment in Indian stocks of about $300 billion at market value, are looking at other emerging stock markets for returns and no longer treat India as the most preferred destination as they did last year, and even the beginning of this year. FII net outflows gave been of the order of Rs 12,500 crore over the past month. The stock market index has seen the biggest correction of 10 percent in a short time. This has caused speculation whether the markets are slipping into a bear phase.

But what is indeed worrisome is India is probably the worst performing stock market among emerging economies this year. This is in sharp contrast to the view taken by the big FIIs that the Modi government reforms could trigger a multi-year bull run in India. Now the same FIIs are shifting the weightage of their global allocation to China where the stock markets have shown 30 percent growth since January. India's Sensex growth remains in negative territory. Even FII inflows, which primarily influence market movement, are flat to negative since January.
Worse, now FIIs also seem to prefer oil exporting markets like Russia and Brazil, both of whom had fallen out of favour after the global oil prices had more than halved, badly affecting their revenues. Now the FIIs believe that oil prices are moderately correcting and returning to oil exporting markets like Russia and Brazil makes sense. This view is buttressed by another major consideration. They feel as the US economy recovers and the prospect of monetary tightening by the Federal Reserve brightens, the dollar would strengthen in the short to medium term.

The Economic Times has just reported a survey of top CEOs and the majority of them suggest that demand is depressed. "The bonhomie and cheer that greeted the arrival of the Modi government is replaced by a sombre mood and a grim acknowledgement of the realities of doing business in India," reports ET, as it captures the sentiment of the CEOs. Little wonder that this is reflecting in the behaviour of the stock market and currency. The largest engineering conglomerate L&T had said some of its plants are lying idle as demand for capital goods is very weak. The Aditya Birla Group had deferred its revenue target of $65 billion by 3 years, to 2018.
These are not good signs for the economy and both the stock market and currency will reflect this in the months ahead.

Worst performing stock market? This is the end of the Modi bubble for FIIs - Firstpost

 

[kurup]

So many butt hurt neighbours .....

 

[RiazHaq]

Summary

Months after the release of the new GDP methodology with much higher numbers, it still remains wildly inconsistent with numerous other indicators, pointing to continued economic slack.
The revised GDP numbers particularly pose dangers for monetary policy decisions, as much of India expects the RBI to cut rates.
RBI Governor Raghuram Rajan and the government’s Chief Economic Adviser Arvind Subramanian, two trained economists, remain 'puzzled' with the new numbers.
Part I of this article series looked at the change in the methodology of calculating India's GDP that literally overnight transformed an 'ailing' economy into one of the best performing economies globally. The problem is not with the methodology per se. The methodology is the same that is globally accepted; the problem is with the missing comparable numbers as per the older methodology, and the missing longer term historical data for the new one (not necessary that historical data beyond three years be made public, but it should at least be made available to statisticians doing the exercise and to other approved authorities for scrutiny/confidence building).
-------
Presented here are some of the related data over the years to get a comprehensive picture. The Index of Industrial Production (IIP) data reveal two insights: Post 2008, there may have not been a sustainable recovery but a sharp bounce back in 2011 which can be attributed to a typical inventory bounce back as normally seen after a period of sharp decline like the one during the 2008-09 period. In a slowdown, cut back in production is multiplied by the effect of sharp inventory reductions, making the situation even worse. An inventory bounce back is the opposite of it. With signs of recovery, companies start filling up shelves again faster than the real demand. The Economist blog, referred in Part I, first suggested that based on the IMF's World Economic Data following market prices, India grew faster than China in the April-March 2010-11 financial year of India's vis-à-vis China's calendar year of 2010. This observation synchronizes well with the inventory bounce back of IIP numbers observed in the following IIP chart.

The IIP for March, reported on 12th May, came in at a five-month low of 2.1%, making the yearly average for 2014-15 at 2.8% compared to a contraction of 0.1% for 2013-14.

True, there are masquerading voices within India with political inclinations who find nothing wrong in this overnight cure of the ailing economy. The same voices blamed the last government for the economic slowdown, which now becomes imaginary, as per the new methodology. The falling earnings (the last quarterly earnings of 101 companies, that declared results by 27th April or so, fell by 9.23%) and the continuous deterioration of balance sheets of companies, especially banks, convincingly debunk any such hypothesis. It also exposes the charade behind the new GDP numbers. Merely stating how the IIP numbers simply do not matter anymore in the methodology, directly or indirectly, may not be the whole truth. The deterioration of balance sheets is the root cause for the increasing NPAs in Indian banks, mostly state-owned ones, without any certainty as of now on whether or not NPAs have reached a saturation level. This is what RBI Governor Rajan said on NPAs on 17th April:

"The non-performing assets have been growing. I'm hopeful that we are near the peak or that we have even passed the peak, but we won't know until it is truly clear with the passage of time."

Similarly, a look at India's trade data shows a sharper slowdown (21%) in exports than in imports (13%) for the last reported month (March 2015). There is an overall decline in both for the year too.

Myth Or Reality: Scrutinizing India's Revised GDP Numbers And Secular Bull Market - Part II | Seeking Alpha

 

[Beidou2020]

Summary

Months after the release of the new GDP methodology with much higher numbers, it still remains wildly inconsistent with numerous other indicators, pointing to continued economic slack.
The revised GDP numbers particularly pose dangers for monetary policy decisions, as much of India expects the RBI to cut rates.
RBI Governor Raghuram Rajan and the government’s Chief Economic Adviser Arvind Subramanian, two trained economists, remain 'puzzled' with the new numbers.
Part I of this article series looked at the change in the methodology of calculating India's GDP that literally overnight transformed an 'ailing' economy into one of the best performing economies globally. The problem is not with the methodology per se. The methodology is the same that is globally accepted; the problem is with the missing comparable numbers as per the older methodology, and the missing longer term historical data for the new one (not necessary that historical data beyond three years be made public, but it should at least be made available to statisticians doing the exercise and to other approved authorities for scrutiny/confidence building).
-------
Presented here are some of the related data over the years to get a comprehensive picture. The Index of Industrial Production (IIP) data reveal two insights: Post 2008, there may have not been a sustainable recovery but a sharp bounce back in 2011 which can be attributed to a typical inventory bounce back as normally seen after a period of sharp decline like the one during the 2008-09 period. In a slowdown, cut back in production is multiplied by the effect of sharp inventory reductions, making the situation even worse. An inventory bounce back is the opposite of it. With signs of recovery, companies start filling up shelves again faster than the real demand. The Economist blog, referred in Part I, first suggested that based on the IMF's World Economic Data following market prices, India grew faster than China in the April-March 2010-11 financial year of India's vis-à-vis China's calendar year of 2010. This observation synchronizes well with the inventory bounce back of IIP numbers observed in the following IIP chart.

The IIP for March, reported on 12th May, came in at a five-month low of 2.1%, making the yearly average for 2014-15 at 2.8% compared to a contraction of 0.1% for 2013-14.

True, there are masquerading voices within India with political inclinations who find nothing wrong in this overnight cure of the ailing economy. The same voices blamed the last government for the economic slowdown, which now becomes imaginary, as per the new methodology. The falling earnings (the last quarterly earnings of 101 companies, that declared results by 27th April or so, fell by 9.23%) and the continuous deterioration of balance sheets of companies, especially banks, convincingly debunk any such hypothesis. It also exposes the charade behind the new GDP numbers. Merely stating how the IIP numbers simply do not matter anymore in the methodology, directly or indirectly, may not be the whole truth. The deterioration of balance sheets is the root cause for the increasing NPAs in Indian banks, mostly state-owned ones, without any certainty as of now on whether or not NPAs have reached a saturation level. This is what RBI Governor Rajan said on NPAs on 17th April:

"The non-performing assets have been growing. I'm hopeful that we are near the peak or that we have even passed the peak, but we won't know until it is truly clear with the passage of time."

Similarly, a look at India's trade data shows a sharper slowdown (21%) in exports than in imports (13%) for the last reported month (March 2015). There is an overall decline in both for the year too.

Myth Or Reality: Scrutinizing India's Revised GDP Numbers And Secular Bull Market - Part II | Seeking Alpha

Your articles are very informative and always a pleasure to read.
Thank you.