India's strong GDP data leaves economists scratching their heads

[Robinhood Pandey]

Nilgiri sucking up to the 35 rs chinese troll will get you kudos from the chinese beholden mods here , but no credibility.
I have seen so many Indians banned here in the last month but he seems to escape censure. Fine by me because every post of his reveals so much about chinese culture and his personal background.

Karma is a b!tch

@Nilgiri you are a Chinese now.

Chalo that's a promotion over bangladeshi.

 

[rott]

Karma is a b!tch

@Nilgiri you are a Chinese now.

Chalo that's a promotion over bangladeshi.

Lol.....

 

[Nilgiri]

Index of Industrial Production - DOWN

This is more of a "on paper" problem. There is a big statistical revision going on in IIP right now. Thats why before the contraction in december of -0.4%, it expanded by 5.7% in november.

Here are the huge problems regarding it that are slowly being reformed:

http://www.thehindubusinessline.com...n/whats-wrong-with-the-iip/article9111554.ece

Its not really a priority for the govt because it is waiting for the back series data to catch up with the current GVA method, rather than commiting too much stats staff to this (and diverting from other serious areas they are needed). So IIP will be volatile and relatively randomized for some more years to come( probably another 3 - 4). I would not follow it too closely whether it be a good number or a bad one.

The impact on whole GDP measurement of this index is limited given there are no such real weighting issues and such present in GVA calculation. Its simply taking valuation returns regarding output - input of each sampled production unit in the tax database etc....and adding it all up and then adding taxes and minus subsidies to get GDP.

Exports from India - DOWN

Yah its been a problem for sure. Its getting better now, esp the non-oil exports. Lot of India's exports cpl years ago was refined oil and as you know its taken a big hit in USD value terms.

Imports from outside - DOWN

Again largely because of low oil prices and the fact India is not really pursuing an export/import trade focused growth right now (though it may do so later when it structures its economy and trading logistics better).

Thus it is more key to look at the overall trade deficit as a whole, which is not really a negative disparaging thing and improving for potentially some good reasons (that again we will have to give a couple years to pass to properly analyse):

https://www.forbes.com/sites/timwor...p-by-5-imports-down-by-nearly-3/#3c1bc3763e24

Amount of Taxes - Rising (Service Tax+ Cesses used to be at 12.36%, now they are at 15%).

That shows a better economy if a govt can extract more without changing rates too much. Yes some tax rates have increased, others have fallen....but accounting for all of that, the tax base is widening in India over time. This means greater formalisation of the economy (more stuff leaving a paper trail that gets recorded and taxed). That is the structural purpose of the demonetisation in the first place. Again it can only be judged in the long term really.

WPI Inflation - BADLY DOWN
CPI Inflation - DOWN

Why are these a problem? Of course it will happen in the short term from less liquidity because of demonetisation. But for them to have an effect on real growth needs a concise argument with concise data for the structural problems regarding the actual impact on the total money velocity resulting in depressed demand etc.

This is again something we can only gauge more long term when more physical production data of goods and services come in at various points during the fiscal year.

Most consumers will not be complaining too much that they have to pay less for their regular groceries and such. Its bad if the prices stay depressed for suppliers, but if its transient, shouldn't be too much of a problem on real growth....even for the quarter in question.

What these trends and figures means, it means that the demand for various products and services inside the country is more or less stagnated (means not growing), or growing at a much slower pace than it was 2 years back.
If the demand is less, obviously sale (visible in exports and imports, also WPI inflationary trends)is also less.

Well for that assertion, if you dont believe the CSO data, you actually need to look at things like steel, cars, motorbikes, cement, coal, oil etc etc and make your own production/consumption index....given that exports and imports do not capture a large enough fraction of the Indian economy's demand and supply which is locally made and consumed.

You can choose whatever you think is the most important raw data....but generally the more the better.

This is essentially (at very large scale and no bias) what the govt does through its GVA, it has access to the tax data and paper trails of every sized company in the formal sector (thats the very definition of the formal sector). Then to account for the role of govt in this, you add taxes and subtract subsidies to get GDP.

So many eminent people in the country and outside has questioned the new way of calculating India's GDP (which was introduced in July 2014, after the new govt came into power), on the basis of all other relevant economic activity indicators.

Whats wrong with this is a few things:

a) The decision was taken by the last govt in power to submit to the IMF method (which recommends GVA over factor cost) to bring it to international norms. It has nothing to do with another govt coming to power during the process of transitioning into the new method. The change to GVA would have continued if the old party continued in power.

b) People will always question the data sampling and such of a new method especially if it creates a new number over an old one. What felt like x% in the old system feels like y% in the new one etc. This has little to do with the actual statistical analysis itself being used to help standardise with international estimates for the world as a whole. The key thing to remember is that they are all just estimates and in the end they are all just numbers on pieces of paper. The actual levels of production are best compared from specific good to specific good as much as possible....both within a country (across time) or between countries (across space). Of course demand/supply ratios (driven by quality) factor in for a lot of it, but then were are back at square one in picking a method and sticking with it. There will be a transition period while the back data (esp if the base year is changed) slowly kicks in.

c) The IMF has sent multiple teams to vet and advise on the process and methodology used by the CSO (which in theory it recommended in the first place). So far they haven't disputed any of it. The issue always lies with the actual utility of GDP estimation in the first place when there is a large informal cash - based economy. The impact on the latter is what I am saying will take much more time to ascertain from its effect on the formal economy.

Please read this, its a very good explanation of what I am saying:

https://www.forbes.com/sites/timwor...-not-with-demonetisation-i-dont/#4fb4dd58715f

There's nothing inherently wrong with the number of 7% as a statistical number based on the data the govt could get. How it pertains to the totality of the Indian economy (which GDP is only an estimate of regarding total output) is another exercise altogether.....but that is a global issue rather than country specific. The degrees of that depend on the formalisation of the economy (which was the point of demonetisation in the first place). You see how this is a bit of a chicken and the egg kind of problem?

Nilgiri sucking up to the 35 rs chinese troll will get you kudos from the chinese beholden mods here , but no credibility.
I have seen so many Indians banned here in the last month but he seems to escape censure. Fine by me because every post of his reveals so much about chinese culture and his personal background.

 

[Gibbs]

You do the same thing I do in the BD subforum (well I probably do a lot worse lol)....and even over there, there are a couple "equivalents" like me who can see past my banter hehe...and do engage seriously from time to time (and I much appreciate that when it happens).

It is the relative perceived position we all feel in relation to others....and we all like to blow off some steam about it. Only human I suppose.

I also was pretty hot-headed like these other folk most of the time and everywhere (at least it felt like it) etc when I first joined...I cooled over a period of time....and now it just bores me to see it heh....so I scroll all the way past till I feel theres something to contribute.

I just focus on learning and explaining now

Yes but trolling apart (In the BD section) most of your posts correlate with actual facts not assumptions and predictions, I guess thats what makes them worthy of discussion

Even though it may be BS at times..

 

[Nilgiri]

Karma is a b!tch

@Nilgiri you are a Chinese now.

Chalo that's a promotion over bangladeshi.

I escape "censure" too.....kid doesnt know how many times I got banned lulz. Remember the quick hi and byes? I remember them lol. Me and that other guy (docs fake account) and he-man and one other dude had the "who can get banned most quickly" with @ranjeet keeping tabs lol. I think it was down to like 1 minute at one point.

 

[Hussain Farooqui]

6-7 is fine, BUT as Dr Manmohan Sing said, we need double digit growth to eradicate poverty and reach out to every section and part of India! Unless we set big target for us, we can't get there!

Bharati economy is enormous enough to alleviate poverty. The sole problem of economic disparity has to be resolved. Mr. Moodi must take measures to ensure adequate distribution of financial resources. The majority of people in Bharat are living in abject poverty solely due to the problem of disparity.

 

[Ajit6333]

I thought we are talking about India? A country which loves to claim things don't belong to them in first place...

Atleast we have something to claim but there are some countries who have nothing to claim except hatred by all neighbouring countries and there only friend in whole world is China who will loot them with economic corridor

 

[nair]

I escape "censure" too.....kid doesnt know how many times I got banned lulz. Remember the quick hi and byes? I remember them lol. Me and that other guy (docs fake account) and he-man and one other dude had the "who can get banned most quickly" with @ranjeet keeping tabs lol. I think it was down to like 1 minute at one point.

You know what? If you can control the urge to troll BD's..... You will be one of the best members in this forum...... (from indian side)

 

[Nilgiri]

Yes but trolling apart (In the BD section) most of your posts correlate with actual facts not assumptions and predictions, I guess thats what makes them worthy of discussion

Too kind my good sir. There are some real dregs in that subforum I have left firmly in the past heh.

But yes lots of the time, they're asking for it from ole Bender

Facts, they're like metal but harder!

 

[Śakra]

Remember who we work for

 

[ideasexchange]

I escape "censure" too.....kid doesnt know how many times I got banned lulz. Remember the quick hi and byes? I remember them lol. Me and that other guy (docs fake account) and he-man and one other dude had the "who can get banned most quickly" with @ranjeet keeping tabs lol. I think it was down to like 1 minute at one point.

Upvoted you only for the BB reference.

 

[Nilgiri]

You know what? If you can control the urge to troll BD's..... You will be one of the best members in this forum...... (from indian side)

It is the darker side of me I admit lol. What to do...what you see is what you get

I suppose a lot of it has to do with I can't counter-troll Pakistanis so much here (trust me, it didn't get very far at all heh) so I take it out on poor ole BD (though they really dont help at all so much of the time even when I'm on best behaviour).

Though I think/hope I am finally improving now over time. Its a journey hehe. Learn what brings out the worst in me and avoid it as much as I can unless I really need to bust some stress.

I guess in the end, you really don't know an online person till you troll and counter troll really hard without restraint... so I think I truly know every type and flavour of internet Bangladeshi lol. A real skill set....I bet it will come in handy one of these days!

 

[livingdead]

Bharati economy is enormous enough to alleviate poverty. The sole problem of economic disparity has to be resolved. Mr. Moodi must take measures to ensure adequate distribution of financial resources. The majority of people in Bharat are living in abject poverty solely due to the problem of disparity.

how do you suggest we should remove disparity? Trickle down effect does not seem to work, and only people who benefited from it all are either rich or lower middle class. More tax?

 

[Hussain Farooqui]

how do you suggest we should remove disparity? Trickle down effect does not seem to work, and only people who benefited from it all are either rich or lower middle class. More tax?

As far as I know the tax collection system is quite efficient in Bharat. One of the methods which can be applied to alleviate poverty is the system of enforcing minimum wages. The employers who collect hundreds of billions as exorbitant profits from their businesses can be obliged through labor laws to pay their employees adequately. This is how money can be distributed adequately to comfort the majority living in abject poverty despite a very good national economy. The fruits of good economy must be enjoyed by all not just the minority of billionaires.

 

[livingdead]

As far as I know tax collection system is quite efficient in Bharat. One of the methods which can be applied to alleviate poverty is the system of enforcing minimum wages. The employers who collect hundreds of billions as exorbitant profits from their businesses can be obliged through labor laws to pay their employees adequately. This is how money can be distributed adequately to comfort the majority living in abject poverty despite a very good national economy. The fruits of good economy must be enjoyed by all not just the minority of billionaires.

the taxation system is far from efficient... estimates vary but it seems anywhere between 1 to 5 percent people pay income tax.
The minimum wage is actually pretty low, varies from state to state.. but low anyway. You dont need to enforce it, I think. The middle class is used to cheap labour, they will hate you for causing inflation. There is already grumble among them regarding NREGA scheme(an employment guarantee scheme by govt of India, that has increased the price of unskilled labour).