What's new

Pakistan poised to become fast growing economy: WB

Yeah but we're not fudging our GDP data like the Indians are. Otherwise we've all heard about the Hindu growth rate and how many economists in India have already stated that the new GDP growth rate does not match up with on ground realities..
 
. .
Well looking at the stats - we may as well surpass India;
Currently our growth rate is 4.6 ; our average went from 6-7 to 4-5 at the beginning of War on Terror which has cost us up to 80 billion dollars.

-2% of our growth rate is due to energy deficiency which will be solved by 2018

another
-2% of our growth rate is due to the fact that our economy is 40% undocumented, which the government is also taking steps to solve.

Pakistan is fighting two full-fledged wars and insurgencies which has hurt us 80 billion dollars;

Balochistan: Most of BLA has already surrendered but pockets remain in remote mountains - they now number less than 100.

Northern Areas: Due to Operation Zarb e Azb; terrorists no longer hold land in the North - all of their facilities, factories and other terror infrastructure has been destroyed - terrorist overall has gone down significantly and Operation Zarb e Azb is in its final phase.

Around 60-80 billion dollars worth of investments were poured into Pakistan in 2015 alone - this includes CPEC, which will divert all trade enroute to China from the Gulf, Suez, and East Africa to Gwadar, this can make Pakistan as one of the centers of trade. This also includes loads of energy projects.

Stability has also significantly increased, crime in Karachi has decreased by 40% in one year alone. BLA has lost its support, and TTP is on the verge of extinction. Ranger operations will also be played out into Punjab as well.

By 2020; I can easily say our economic growth will reach 8-9% and probably even 10% if we do stuff right.


IMF doesnt even know the difference between flag of Angola and Mynamar - how can we take them seriously?
Fair enough but I can't see the descrepency between IMF and WB forecasts being as much as 200%- this is not a margin of error that any economist working for the IMF/WB would accept.

What macro or micro economic factors have changed in the last 6-10 months since the IMF made the above forecasts? I'm sure Pakistan can get to 4-5% in the next 5 years, 8-10% is beyond optimsitic and would require all of the stars aligning for Pakistan- major reforms carried out, huge inflows of FDI, a massive turn around in the global economic enviroment, a signifcant reduction in violence etc etc. In 30 years maybe, but these things don't happen overnight.

@Nilgiri @PARIKRAMA
 
.
I think the indians already know this, it has been published several times for it to be subject matter for trolling . India's actual growth rate is around 5.5 %.


Srsly there is no need for that post you're inviting trolls u should delete it @Beef Bhaijan

cant post links right now as supposedly I dont have any posts But here is the article from DNA

Is India's GDP really growing at 7.5%?

PRAVEENA SHARMA | Tue, 29 Dec 2015-07:45am , New Delhi , dna

Economists see 5.5% a realistic number, say a lot is amiss in the macro data that don't adequately capture the economic ground reality

It's been almost a year since the revised method of measuring gross domestic product (GDP) was put in place but it still hasn't seem to have instilled confidence in some economists and rating agencies.

D K Srivasatava, chief economic advisor, EY India, is emphatic when he proclaims that the economic ground realities are at variance with the national income growth being projected in the new series by the government for the current fiscal.

So now if India grows at 5.5 % and Pakistan grows at 6.5 % then we actually do surpass them and contribute to a greater overall asian growth rate.
 
.
Yeah but we're not fudging our GDP data like the Indians are. Otherwise we've all heard about the Hindu growth rate and how many economists in India have already stated that the new GDP growth rate does not match up with on ground realities..
Cool story, too bad it is nonsense.

IMF retains India’s GDP forecast for 2017 at 7.5 % - The Hindu

IMF retains India growth forecast for next two years at 7.5% - timesofindia-economictimes

India Leads World Bank Growth Forecast Amid Global Economic Heavy Weather - India Real Time - WSJ

India bucks global trend with 7.3% growth - Feb. 8, 2016

India Sees Growth Exceeding Estimate as Modi Prepares Budget - Bloomberg Business

Or are all these independant sources in on the evil Hindu number fudging also?
 
.
Are you refuting and doubting your own economists over these "independant sources" ??

Do they mention where their getting their GDP numbers from ??

Writing with fudged data is still fudging not Sledging ..isnt it ?

Cool story, too bad it is nonsense.



Or are all these independant sources in on the evil Hindu number fudging also?

As far as I can tell these are American sources going off of your officially "controversial" figures. :)

Try to read up on this article where Praveen has laid it out beautifully..

Is India's GDP really growing at 7.5%?

PRAVEENA SHARMA | Tue, 29 Dec 2015-07:45am , New Delhi , dna

Economists see 5.5% a realistic number, say a lot is amiss in the macro data that don't adequately capture the economic ground reality

It's been almost a year since the revised method of measuring gross domestic product (GDP) was put in place but it still hasn't seem to have instilled confidence in some economists and rating agencies.

D K Srivasatava, chief economic advisor, EY India, is emphatic when he proclaims that the economic ground realities are at variance with the national income growth being projected in the new series by the government for the current fiscal.



Cool story, too bad it is nonsense.



Or are all these independant sources in on the evil Hindu number fudging also?
 
.
Are you refuting and doubting your own economists over these "independant sources" ??
He is one economist working for EY India, he just happens to be Indian, does that make him more creidble or is that just what suits you?

Do they mention where their getting their GDP numbers from ??
So the IMF and WB are mindless parrots who simply repeat the offical GDP growth figures coming from governments without testing them at all? Does that sound logical to you?


Are these figures fudged also:

India emerges top FDI destination leaving behind China, US in 2015 | business | Hindustan Times

India grabs investment league pole position - FT.com

India Tops Foreign Investment Ranking Ahead of U.S and China


India among top 10 FDI recipients - The Hindu


Top-10-FDI-Destinations.jpg


Writing with fudged data is still fudging not Sledging ..isnt it ?

This has been discussed to death, rebalancing is not something India has invented but something many economies have done in recent times.


@Nilgiri @MilSpec


I'm going to bed now, this mindless conversation has literally bored me that much.
 
.
:) ..Why you getting so hyped up about stuff that the top Indian economists like Raghuram Rajan from the Reserve Bank of India, have themselves stated ?. Why would he lie to you ?

And you coming back all riled up at me simply because I'm Pakistani ??...lol

Dude learn to counter with logic not anger. :)

Now, You need to read that article again a couple of times for it to penetrate fully. The article clearly states "Many Economists" are of the same view that the economy isnt growing at a 7.5 % rate because the underlying drivers dont support the data revision done to get these fudged figures in order to look good when compared with China.

The purpose of statistics is not to look good on books but to measure achievement.

Here read Rajan's words, not mine:

“There are problems with the way we count GDP, which is why we need to be careful sometimes just talking about growth," Rajan on Thursday said in his address at the 13th convocation at Indira Gandhi Institute of Development Research.

Here is the article.


Why Raghuram Rajan doesn’t trust India’s GDP numbers


by Dinesh Unnikrishnan Jan 29, 2016 11:40 IST

Narendra Modi government introduced new measure to count the GDP (based on Gross Value Added (GVA) method instead of the earlier one based on factor cost) and changed the base year of GDP calculation to 2011-12 from 2004-05. Reserve Bank of India (RBI) governor Raghuram Rajan has now joined this group, raising questions about the GDP numbers.
Narendra Modi government introduced new measure to count the GDP (based on Gross Value Added (GVA) method instead of the earlier one based on factor cost) and changed the base year of GDP calculation to 2011-12 from 2004-05. Reserve Bank of India (RBI) governor Raghuram Rajan has now joined this group, raising questions about the GDP numbers.


There are problems with the way we count GDP, which is why we need to be careful sometimes just talking about growth," Rajan on Thursday said in his address at the 13th convocation at Indira Gandhi Institute of Development Research.

The new method of GDP instantly lifted the country’s GDP growth to 7.3 percent in fiscal year 2015 compared with 5.5 per cent under the old series. For the Modi government, the higher GDP number was euphoric to support its claims that the economy has indeed turned the corner to the high-growth trajectory, becoming world's fastest growing major economy even beating China’s growth rate (though the size of Chinese economy is five times more than that of India.)

But the 'skeptics', who would hesitate to go with the Modi camp’s euphoria, kept cautioning about the protruding disconnect between the new set of GDP numbers and high frequency macro-economic indicators in the economy. These included bank credit growth, corporate performance, auto sales, factory output and growth in the manufacturing sector that should ideally correlate with the GDP figure. Even while accepting that the fresh GDP calculation methodology is in line with international practice, they questioned the actual growth rate of the economy and the picture depicted by the new set of numbers.

To explain his argument, Rajan took the example of two mothers who babysit each other's child instead of their own and exchange money as charges. "There is a rise in economic activity as each pays the other, but the net effect on the economy is questionable," said Rajan.
“We should be careful about how we count. Obviously lots of people have thought how to improve our counting of GDP and going forward that is something that we will have to think about," the governor added.

The comments, coming from a world-renowned economist and the head of country’s central bank, are indeed serious enough and should be taken note by the Modi-government. The fact is that there are serious concerns on growth on the ground. There are a few reasons that tell us why the high GDP numbers aren't mirroring the actual situation on ground.

One, a highly stressed banking sector and tepid credit growth do not reflect a fast growing, strong economy.

Total stressed assets (bad and restructured assets) in the banking sector has risen to 12 per cent of the total bank loans, while gross NPAs of the banking sector, as a percentage of total loans, could reach 5.4% by September 2016, according to the RBI's financial stability report (FSR) from 5.1% in September 2015.

Clearly, the health of the banking sector doesn’t look good so far. This is also indicated by the December quarter earnings of ICICI bank, which has reported a spike in gross NPAs to 4.72 per cent from 3.77 per cent in the preceding quarter, indicating that bad loan worries aren't over for the industry yet.

Stress in the banking sector has resulted in lower credit flow to productive sectors. Going by the latest RBI data, bank lending to industries has grown by 4.6 percent in the 12 months till October 2015 compared with 7.8 percent in the corresponding period in the previous year.

In the March-October period of the current fiscal year, credit growth to industries has languished at negative 0.3 percent compared with 0.7 percent in the previous year. The worst hit has been medium-sized companies, where bank lending has contracted by 10.9 percent as against a contraction of 1.1 per cent in the same period last year.
According to analysts, there is more pain left in the banking sector as a significant chunk of the restructured assets will turn bad in the absence of major pick up in the economic scenario.

Two, manufacturing growth has been tepid. The tepid growth in factory output, also reflected in the core sector growth (fell 1.3 percent in November) and monthly PMI data (to 49.1 from 50.3 in November) indicate that revival in manufacturing activity has remained elusive.


The growth in the manufacturing sector till November this fiscal year has averaged at 3.9 per cent compared with 2.3 per cent in the previous fiscal, which signals some improvement in the economy but not a sharp jump.

The sharp contraction in the November IIP number to a four-year low of negative 3.2 percent, (though partly due to seasonal factors) a visible drop in capital goods production and sequential contraction in most of the manufactured products sub-components have raised doubts among economists on the durability of the recent robustness in the industrial output.

Three, corporate earnings have been muted so far and hasn’t shown any significant revival yet. This is evident from the profit and revenues growth of companies reported earnings in the September quarter and those companies reported earnings so far in the December quarter stood. The over-leveraged corporates are experiencing further pressure on their cash flows on account of prolonged economic slowdown.

A recent note from rating agency Crisil forecast corporate earnings to grow by mere 2 percent in the three months ending December compared with 5 percent in the corresponding period in the previous fiscal year on account of plunging commodity prices coupled with weak investments in the economy.

Four, although there is an improvement in the car sales in recent quarters, the two-wheeler sales have tumbled. In the December quarter, the two-wheeler sales have shown a decline. This indicates tepid consumer demand.

Five, rural demand continues to be weak as evident from the earnings of companies like HUL, which were below analysts' expectations with a 22 per cent decline in net profit at Rs 971 crore in the third quarter ended December 31, 2015, as compared to Rs 1,252 crore in the corresponding three months of the previous fiscal.

Sixth, India has been facing massive contraction on the export-front. The country’s exports have shrunk for the 13 consecutive month in a row. It fell by 18% during April-December 2015 from the same period year ago.

As Firstpost has noted before, one of the major factors that benefited the Modi government in the past year was the crash in oil prices, which helped lessen the burden on import bill and the inflation. But, except this, there has not been any marked improvement in the growth triggers in the domestic market regardless of what the GDP number shows.

This is probably the reason that prompted Rajan to question the new methodology to calculate the GDP numbers. Clearly, it is time for the Modi government to pay attention to the 'skeptics' and look at the economy in a more realistic manner.
 
.
World Bank (WB) President Jim Yong Kim has said that Pakistan is poised to become the next fast growing successful economy due to important steps taken by the government over the past few years.

Addressing a meeting on the country’s economic performance on Tuesday, he pointed out that the country has made significant strides to achieve micro economic stability and enhance its domestic revenues by introducing reforms in the tax system.

He said that the country had also undertaken a number of important steps to improve business climate. He said that Pakistan has an important geo strategic location and peace and stability in the country is imperative for the entire world..

I hope whoever comes to rule Pakistan from 2018, has similar business minded reforming mindset. 10 years from now, Pakistan would be very close to being a $ 1.5 to 2 trillion worth economy. With CPEC phase III being worked on in ten years, the $ 2 T goal may be achievable a little sooner than 2028-2030.

@Irfan Baloch @DESERT FIGHTER: I just wrote about it on that other post.

What are Pakistan's growth projections according to the world bank from 2015-2020? According to the IMF, Pakistan is going to one of the poorer performers in the region.

Compare to who? India? How about send 10 million Pakistanis to the US and the UK, give them all H1B's and hi-tech jobs, plus outsource 10 million jobs to Pakistan. Let the 10 million living in the West send billions back to Pakistan every month. Call it the "FDI" and report it however you like to cook the numbers :rofl: :enjoy:. The WB will believe what you want them to believe as you are no longer in a need to get loans from them. You become their need, not the other way around. They'll kiss you and will give you a loan and will write whatever size of the economy you can project :enjoy:

Amazing how banks look at customers with a credit rating and bank balance with A ratings SO differently then B or C :lol:


Read my post above. India has the luxury to cook up her economic system and call the Expat's billions sent back to India every month, the "FDI". IMF, the WB, ALL are Western banks and work on lobbyists $$. Add real investments and the fact that the West wanted you to stand up to China, ends the story. The real credit to India's growth and all these jobs, etc, goes to China. You guys should thank them for their existence next to you :enjoy:

Pakistan is nowhere near having 20 million jobs given to them by the West (inside the West and in Pakistan as outsourced) . So be patient. I will tell you, starting in the next five years, Pakistan will be competing with India for hi-tech labor. Not one to one as India has 5 times the population, but a few dozen billions will be lost to Pakistanis over the next 10 years for sure. Add outsourcing, and CPEC, etc, on top of it.
 
.
I will tell you, starting in the next five years, Pakistan will be competing with India for hi-tech labor. Not one to one as India has 5 times the population, but a few dozen billions will be lost to Pakistanis over the next 10 years for sure. Add outsourcing, and CPEC, etc, on top of it.

Kindly substantiate your 10 year prediction. As far as I know our closest competitor on outsourcing is Indonesia and Phillipines. Besides outsourcing is a saturated market here. We're moving away from it towards the next big thing- start-ups. Kindly also elucidate how CPEC will contribute to more jobs considering it's yet to materialize.

:) ..Why you getting so hyped up about stuff that the top Indian economists like Raghuram Rajan from the Reserve Bank of India, have themselves stated ?. Why would he lie to you ?

And you coming back all riled up at me simply because I'm Pakistani ??...lol

Dude learn to counter with logic not anger. :)

Now, You need to read that article again a couple of times for it to penetrate fully. The article clearly states "Many Economists" are of the same view that the economy isnt growing at a 7.5 % rate because the underlying drivers dont support the data revision done to get these fudged figures in order to look good when compared with China.

The purpose of statistics is not to look good on books but to measure achievement.

Here read Rajan's words, not mine:

“There are problems with the way we count GDP, which is why we need to be careful sometimes just talking about growth," Rajan on Thursday said in his address at the 13th convocation at Indira Gandhi Institute of Development Research.

Here is the article.


Why Raghuram Rajan doesn’t trust India’s GDP numbers


by Dinesh Unnikrishnan Jan 29, 2016 11:40 IST

Narendra Modi government introduced new measure to count the GDP (based on Gross Value Added (GVA) method instead of the earlier one based on factor cost) and changed the base year of GDP calculation to 2011-12 from 2004-05. Reserve Bank of India (RBI) governor Raghuram Rajan has now joined this group, raising questions about the GDP numbers.
Narendra Modi government introduced new measure to count the GDP (based on Gross Value Added (GVA) method instead of the earlier one based on factor cost) and changed the base year of GDP calculation to 2011-12 from 2004-05. Reserve Bank of India (RBI) governor Raghuram Rajan has now joined this group, raising questions about the GDP numbers.


There are problems with the way we count GDP, which is why we need to be careful sometimes just talking about growth," Rajan on Thursday said in his address at the 13th convocation at Indira Gandhi Institute of Development Research.

The new method of GDP instantly lifted the country’s GDP growth to 7.3 percent in fiscal year 2015 compared with 5.5 per cent under the old series. For the Modi government, the higher GDP number was euphoric to support its claims that the economy has indeed turned the corner to the high-growth trajectory, becoming world's fastest growing major economy even beating China’s growth rate (though the size of Chinese economy is five times more than that of India.)

But the 'skeptics', who would hesitate to go with the Modi camp’s euphoria, kept cautioning about the protruding disconnect between the new set of GDP numbers and high frequency macro-economic indicators in the economy. These included bank credit growth, corporate performance, auto sales, factory output and growth in the manufacturing sector that should ideally correlate with the GDP figure. Even while accepting that the fresh GDP calculation methodology is in line with international practice, they questioned the actual growth rate of the economy and the picture depicted by the new set of numbers.

To explain his argument, Rajan took the example of two mothers who babysit each other's child instead of their own and exchange money as charges. "There is a rise in economic activity as each pays the other, but the net effect on the economy is questionable," said Rajan.
“We should be careful about how we count. Obviously lots of people have thought how to improve our counting of GDP and going forward that is something that we will have to think about," the governor added.

The comments, coming from a world-renowned economist and the head of country’s central bank, are indeed serious enough and should be taken note by the Modi-government. The fact is that there are serious concerns on growth on the ground. There are a few reasons that tell us why the high GDP numbers aren't mirroring the actual situation on ground.

One, a highly stressed banking sector and tepid credit growth do not reflect a fast growing, strong economy.

Total stressed assets (bad and restructured assets) in the banking sector has risen to 12 per cent of the total bank loans, while gross NPAs of the banking sector, as a percentage of total loans, could reach 5.4% by September 2016, according to the RBI's financial stability report (FSR) from 5.1% in September 2015.

Clearly, the health of the banking sector doesn’t look good so far. This is also indicated by the December quarter earnings of ICICI bank, which has reported a spike in gross NPAs to 4.72 per cent from 3.77 per cent in the preceding quarter, indicating that bad loan worries aren't over for the industry yet.

Stress in the banking sector has resulted in lower credit flow to productive sectors. Going by the latest RBI data, bank lending to industries has grown by 4.6 percent in the 12 months till October 2015 compared with 7.8 percent in the corresponding period in the previous year.

In the March-October period of the current fiscal year, credit growth to industries has languished at negative 0.3 percent compared with 0.7 percent in the previous year. The worst hit has been medium-sized companies, where bank lending has contracted by 10.9 percent as against a contraction of 1.1 per cent in the same period last year.
According to analysts, there is more pain left in the banking sector as a significant chunk of the restructured assets will turn bad in the absence of major pick up in the economic scenario.

Two, manufacturing growth has been tepid. The tepid growth in factory output, also reflected in the core sector growth (fell 1.3 percent in November) and monthly PMI data (to 49.1 from 50.3 in November) indicate that revival in manufacturing activity has remained elusive.


The growth in the manufacturing sector till November this fiscal year has averaged at 3.9 per cent compared with 2.3 per cent in the previous fiscal, which signals some improvement in the economy but not a sharp jump.

The sharp contraction in the November IIP number to a four-year low of negative 3.2 percent, (though partly due to seasonal factors) a visible drop in capital goods production and sequential contraction in most of the manufactured products sub-components have raised doubts among economists on the durability of the recent robustness in the industrial output.

Three, corporate earnings have been muted so far and hasn’t shown any significant revival yet. This is evident from the profit and revenues growth of companies reported earnings in the September quarter and those companies reported earnings so far in the December quarter stood. The over-leveraged corporates are experiencing further pressure on their cash flows on account of prolonged economic slowdown.

A recent note from rating agency Crisil forecast corporate earnings to grow by mere 2 percent in the three months ending December compared with 5 percent in the corresponding period in the previous fiscal year on account of plunging commodity prices coupled with weak investments in the economy.

Four, although there is an improvement in the car sales in recent quarters, the two-wheeler sales have tumbled. In the December quarter, the two-wheeler sales have shown a decline. This indicates tepid consumer demand.

Five, rural demand continues to be weak as evident from the earnings of companies like HUL, which were below analysts' expectations with a 22 per cent decline in net profit at Rs 971 crore in the third quarter ended December 31, 2015, as compared to Rs 1,252 crore in the corresponding three months of the previous fiscal.

Sixth, India has been facing massive contraction on the export-front. The country’s exports have shrunk for the 13 consecutive month in a row. It fell by 18% during April-December 2015 from the same period year ago.

As Firstpost has noted before, one of the major factors that benefited the Modi government in the past year was the crash in oil prices, which helped lessen the burden on import bill and the inflation. But, except this, there has not been any marked improvement in the growth triggers in the domestic market regardless of what the GDP number shows.

This is probably the reason that prompted Rajan to question the new methodology to calculate the GDP numbers. Clearly, it is time for the Modi government to pay attention to the 'skeptics' and look at the economy in a more realistic manner.

Raghuram Rajan led RBI had predicted the GDP growth to be 7.6% for FY16. Here's the article:
RBI lowers GDP growth forecast to 7.6% for FY16 : The Hindu - Mobile edition

Here's the justification of our GDP calculation :

India's Change In GDP Calculation Method Seems Highly Sensible
 
.
Kindly substantiate your 10 year prediction. As far as I know our closest competitor on outsourcing is Indonesia and Phillipines. Besides outsourcing is a saturated market here. We're moving away from it towards the next big thing- start-ups. Kindly also elucidate how CPEC will contribute to more jobs considering it's yet to materialize.
stop wasting your time.

He is one economist working for EY India, he just happens to be Indian, does that make him more creidble or is that just what suits you?


So the IMF and WB are mindless parrots who simply repeat the offical GDP growth figures coming from governments without testing them at all? Does that sound logical to you?


Are these figures fudged also:

India emerges top FDI destination leaving behind China, US in 2015 | business | Hindustan Times

India grabs investment league pole position - FT.com

India Tops Foreign Investment Ranking Ahead of U.S and China


India among top 10 FDI recipients - The Hindu


Top-10-FDI-Destinations.jpg




This has been discussed to death, rebalancing is not something India has invented but something many economies have done in recent times.


@Nilgiri @MilSpec


I'm going to bed now, this mindless conversation has literally bored me that much.

stop wasting your time. Say Congrats and move on
 
.
:) ..Why you getting so hyped up about stuff that the top Indian economists like Raghuram Rajan from the Reserve Bank of India, have themselves stated ?. Why would he lie to you ?

And you coming back all riled up at me simply because I'm Pakistani ??...lol

Dude learn to counter with logic not anger. :)

Now, You need to read that article again a couple of times for it to penetrate fully. The article clearly states "Many Economists" are of the same view that the economy isnt growing at a 7.5 % rate because the underlying drivers dont support the data revision done to get these fudged figures in order to look good when compared with China.

The purpose of statistics is not to look good on books but to measure achievement.

Here read Rajan's words, not mine:

“There are problems with the way we count GDP, which is why we need to be careful sometimes just talking about growth," Rajan on Thursday said in his address at the 13th convocation at Indira Gandhi Institute of Development Research.

Here is the article.


Why Raghuram Rajan doesn’t trust India’s GDP numbers


by Dinesh Unnikrishnan Jan 29, 2016 11:40 IST

Narendra Modi government introduced new measure to count the GDP (based on Gross Value Added (GVA) method instead of the earlier one based on factor cost) and changed the base year of GDP calculation to 2011-12 from 2004-05. Reserve Bank of India (RBI) governor Raghuram Rajan has now joined this group, raising questions about the GDP numbers.
Narendra Modi government introduced new measure to count the GDP (based on Gross Value Added (GVA) method instead of the earlier one based on factor cost) and changed the base year of GDP calculation to 2011-12 from 2004-05. Reserve Bank of India (RBI) governor Raghuram Rajan has now joined this group, raising questions about the GDP numbers.


There are problems with the way we count GDP, which is why we need to be careful sometimes just talking about growth," Rajan on Thursday said in his address at the 13th convocation at Indira Gandhi Institute of Development Research.

The new method of GDP instantly lifted the country’s GDP growth to 7.3 percent in fiscal year 2015 compared with 5.5 per cent under the old series. For the Modi government, the higher GDP number was euphoric to support its claims that the economy has indeed turned the corner to the high-growth trajectory, becoming world's fastest growing major economy even beating China’s growth rate (though the size of Chinese economy is five times more than that of India.)

But the 'skeptics', who would hesitate to go with the Modi camp’s euphoria, kept cautioning about the protruding disconnect between the new set of GDP numbers and high frequency macro-economic indicators in the economy. These included bank credit growth, corporate performance, auto sales, factory output and growth in the manufacturing sector that should ideally correlate with the GDP figure. Even while accepting that the fresh GDP calculation methodology is in line with international practice, they questioned the actual growth rate of the economy and the picture depicted by the new set of numbers.

To explain his argument, Rajan took the example of two mothers who babysit each other's child instead of their own and exchange money as charges. "There is a rise in economic activity as each pays the other, but the net effect on the economy is questionable," said Rajan.
“We should be careful about how we count. Obviously lots of people have thought how to improve our counting of GDP and going forward that is something that we will have to think about," the governor added.

The comments, coming from a world-renowned economist and the head of country’s central bank, are indeed serious enough and should be taken note by the Modi-government. The fact is that there are serious concerns on growth on the ground. There are a few reasons that tell us why the high GDP numbers aren't mirroring the actual situation on ground.

One, a highly stressed banking sector and tepid credit growth do not reflect a fast growing, strong economy.

Total stressed assets (bad and restructured assets) in the banking sector has risen to 12 per cent of the total bank loans, while gross NPAs of the banking sector, as a percentage of total loans, could reach 5.4% by September 2016, according to the RBI's financial stability report (FSR) from 5.1% in September 2015.

Clearly, the health of the banking sector doesn’t look good so far. This is also indicated by the December quarter earnings of ICICI bank, which has reported a spike in gross NPAs to 4.72 per cent from 3.77 per cent in the preceding quarter, indicating that bad loan worries aren't over for the industry yet.

Stress in the banking sector has resulted in lower credit flow to productive sectors. Going by the latest RBI data, bank lending to industries has grown by 4.6 percent in the 12 months till October 2015 compared with 7.8 percent in the corresponding period in the previous year.

In the March-October period of the current fiscal year, credit growth to industries has languished at negative 0.3 percent compared with 0.7 percent in the previous year. The worst hit has been medium-sized companies, where bank lending has contracted by 10.9 percent as against a contraction of 1.1 per cent in the same period last year.
According to analysts, there is more pain left in the banking sector as a significant chunk of the restructured assets will turn bad in the absence of major pick up in the economic scenario.

Two, manufacturing growth has been tepid. The tepid growth in factory output, also reflected in the core sector growth (fell 1.3 percent in November) and monthly PMI data (to 49.1 from 50.3 in November) indicate that revival in manufacturing activity has remained elusive.


The growth in the manufacturing sector till November this fiscal year has averaged at 3.9 per cent compared with 2.3 per cent in the previous fiscal, which signals some improvement in the economy but not a sharp jump.

The sharp contraction in the November IIP number to a four-year low of negative 3.2 percent, (though partly due to seasonal factors) a visible drop in capital goods production and sequential contraction in most of the manufactured products sub-components have raised doubts among economists on the durability of the recent robustness in the industrial output.

Three, corporate earnings have been muted so far and hasn’t shown any significant revival yet. This is evident from the profit and revenues growth of companies reported earnings in the September quarter and those companies reported earnings so far in the December quarter stood. The over-leveraged corporates are experiencing further pressure on their cash flows on account of prolonged economic slowdown.

A recent note from rating agency Crisil forecast corporate earnings to grow by mere 2 percent in the three months ending December compared with 5 percent in the corresponding period in the previous fiscal year on account of plunging commodity prices coupled with weak investments in the economy.

Four, although there is an improvement in the car sales in recent quarters, the two-wheeler sales have tumbled. In the December quarter, the two-wheeler sales have shown a decline. This indicates tepid consumer demand.

Five, rural demand continues to be weak as evident from the earnings of companies like HUL, which were below analysts' expectations with a 22 per cent decline in net profit at Rs 971 crore in the third quarter ended December 31, 2015, as compared to Rs 1,252 crore in the corresponding three months of the previous fiscal.

Sixth, India has been facing massive contraction on the export-front. The country’s exports have shrunk for the 13 consecutive month in a row. It fell by 18% during April-December 2015 from the same period year ago.

As Firstpost has noted before, one of the major factors that benefited the Modi government in the past year was the crash in oil prices, which helped lessen the burden on import bill and the inflation. But, except this, there has not been any marked improvement in the growth triggers in the domestic market regardless of what the GDP number shows.

This is probably the reason that prompted Rajan to question the new methodology to calculate the GDP numbers. Clearly, it is time for the Modi government to pay attention to the 'skeptics' and look at the economy in a more realistic manner.

You do realise who Rajan was addressing and what exactly he was talking about right?

Oh wait you just post things verbatim without actually looking at the details and trying to understand.

So here are some direct words from Rajan to clarify what he meant for people like you in simple terms:

Never doubted new GDP numbers, says Raghuram Rajan - timesofindia-economictimes

He released this right after people latched onto one sentence he said without applying common sense and context.

Read this thread before you make a further fool of yourself:

RBI Governor Raghuram Rajan sceptical about GDP calculation
 
. .
World Bank (WB) President Jim Yong Kim has said that Pakistan is poised to become the next fast growing successful economy due to important steps taken by the government over the past few years.

Addressing a meeting on the country’s economic performance on Tuesday, he pointed out that the country has made significant strides to achieve micro economic stability and enhance its domestic revenues by introducing reforms in the tax system.

He said that the country had also undertaken a number of important steps to improve business climate. He said that Pakistan has an important geo strategic location and peace and stability in the country is imperative for the entire world.

He said the World Bank, being a partner, will support the government’s initiatives to bolster economic growth and provide assistance in the areas of need.

“We are not visiting Pakistan to give prescriptions but will lend support to further consolidate gains made in the economic sector,” he said.

The World Bank president emphasised the need for bringing dynamism in the private sector saying this will generate immense employment opportunities and lift the people out of poverty. He also underlined the need for more investments in the education and health sectors.

Earlier, Finance Minister Senator Ishaq Dar apprised the World Bank president about the country’s economic performance. He said the present government assumed power in difficult circumstances but due to prudent policies, it averted the default.

He said the revenue collection has witnessed significant growth over the last three years and budget deficit has been reduced. He said we are on track to reduce it to 4.3 per cent during the current fiscal year.

The minister said that the country is expected to achieve more than five per cent of GDP growth due to improved performance of various sectors particularly manufacturing. He said the inflation had been brought down to 2.1 per cent, which is the lowest in the last twelve years.

Dar said that allocations for social safety nets have been tripled to protect the vulnerable groups. He said that, currently, five million deserving families are being provided stipends under the Income Support Programme and the government’s target is to enhance it to 5.4 million families by the end of this year.

He said that as part of efforts to give an impetus to economic growth, development spending has been doubled. He said the government is also on track to address the energy crisis and by the end of March 2018, 10,000 MW of electricity will be added to the national grid.

He said privatisation policy is being pursued to improve the performance and service delivery of public sector enterprises. He said the country is treading

http://www.pakistantoday.com.pk/201...-poised-to-become-fast-growing-economy-wb/the right path to consolidate the gains achieved over the past few years. He said the policies are aimed at ensuring inclusive and sustainable growth in the years to come.

The growth of the Muslim countries depend on the well-being of the Esnaf, the bedrock of the economy. Now, Esnaf are self employed people engaged in small businesses like trade, small scale manufacturing etc. They are the free thinkers who aren't bogged with imported ideologies and follow the middle of the path. They are conservative and believe in spending with a firm belief that Allah u Azimmushhan is the Al Razzak, the Provider. They value education and try to educate their kids. As the Esnaf have been being taken care of in Turkey under the Muslim government, she is progressing at a remarkable pace. I believe the same will happen with Pak.
 
.
-2% of our growth rate is due to the fact that our economy is 40% undocumented, which the government is also taking steps to solve.
Did you know that if that undocumented economy is documented, then the overall growth rate figures can vary a lot because its freaking 40%. And not only that, if undocumented economy is growing slower than the documented economy, the overall growth rate will come down. And one can figure out the rate of undocumented economy by seeing how much % of undocumented economy has varied overtime.
 
.

Latest posts

Pakistan Affairs Latest Posts

Back
Top Bottom