Bharat Rakshak Forum Announcement

Hello Everyone,

A warm welcome back to the Bharat Rakshak Forum.

Important Notice: Due to a corruption in the BR forum database we regret to announce that data records relating to some of our registered users have been lost. We estimate approx. 500 user details are deleted.

To ease the process of recreating the user IDs we request members that have previously posted on the BR forums to recognise and identify their posts, once the posts are identified please contact the BRF moderator team by emailing BRF Mod Team with your post details.

The mod team will be able to update your username, email etc. so that the user history can be maintained.

Unfortunately for members that have never posted or have had all their posts deleted i.e. users that have 0 posts, we will be unable to recreate your account hence we request that you re-register again.

We apologise for any inconvenience caused and thank you for your understanding.

Regards,
Seetal

Indian Economy News & Discussion - Aug 26 2015

The Technology & Economic Forum is a venue to discuss issues pertaining to Technological and Economic developments in India. We request members to kindly stay within the mandate of this forum and keep their exchanges of views, on a civilised level, however vehemently any disagreement may be felt. All feedback regarding forum usage may be sent to the moderators using the Feedback Form or by clicking the Report Post Icon in any objectionable post for proper action. Please note that the views expressed by the Members and Moderators on these discussion boards are that of the individuals only and do not reflect the official policy or view of the Bharat-Rakshak.com Website. Copyright Violation is strictly prohibited and may result in revocation of your posting rights - please read the FAQ for full details. Users must also abide by the Forum Guidelines at all times.
Theo_Fidel
BRF Oldie
Posts: 7568
Joined: 31 Mar 2006 02:15
Location: MO,US,NCJ TN

Indian Economy News & Discussion - Aug 26 2015

Postby Theo_Fidel » 26 Aug 2015 23:25

Since no one else is starting a new thread....
---------------

Last post of previous thread....

viewtopic.php?f=2&t=6654&start=3960#p1891943
----------------

I think what we can say is that there is 'temporary' over capacity. I guess from the power producer spread sheet that makes investment very dicey as the banker sitting in front of them will ask how do they plan to sell. Next thing they know financing application denied! From the hot money investment point of view where every quarter returns have to be delivered or one goes bust, working on investment this can seem like over capacity.

Theo_Fidel
BRF Oldie
Posts: 7568
Joined: 31 Mar 2006 02:15
Location: MO,US,NCJ TN

Re: Indian Economy News & Discussion - Aug 26 2015

Postby Theo_Fidel » 27 Aug 2015 04:45


somnath
BRF Oldie
Posts: 3416
Joined: 29 Jan 2003 12:31
Location: Singapore

Re: Indian Economy News & Discussion - Aug 26 2015

Postby somnath » 27 Aug 2015 08:45

Somnath, why there are so many power cuts and unplanned power outages in India? It is a constant problem in Hyderabad and even in Mumbai at times. Everybody has an inverter in the alert net to drive a fan or two and a few light bulbs/tube lights. Are the power rates set too low for even residential customers? We know already about agriculture sector because they have subsidies.

Ok strike that. It is the problem with SEBs. That does make sense. SEBs need to be made more efficient and corruption free. Easier said than done. But at least the incumbents are making a start or so one hopes.

You identified it correctly. The issue is with SEBs, or more correctly, with the Discoms (there are no SEBs anymore, separate Gencos, Transcos and Discoms). As I said earlier, Discoms are bankrupt, and they just cant afford to pay for the power being generated. Plus, with industrial/commercial demand being low, the Gencos are stuck with large overcapacities.

There are some allusions from people here that this is a "systemic problem", "systemic issues" etc - these are good examples of semantic callisthenics but not economics. The issue is we have an installed capacity of X, and a demand for Y, where Y<<<<X, ie there is excess capacity. Whether the reasons are structural, systemic or only cyclical is a variable in finding a solution.

Which is where my original point comes in. When we talk of public investments, they need to be smartly deployed. Building 10 more power plants today, without fixing the structural issues with Discoms is money down the drain (and more NPAs with banks). Fixing Discoms need a combination of capital (to clean up their balance sheets), political will @ a state level (to start charging realistic user tariffs) and adroit political management (by Centre to goad states into doing the first two).

The reason why Mumbai doesnt have power cuts is because both utilities (Tata Power and Reliance Energy) are pvt utilities that charge market tariffs, and try to minimise T&D losses. They have no problem sourcing power from anywhere.

The other refrain that comes about is, "India is a power hungry country". Yes, India is also a "car hungry country", as well as "luxury homes hungry" country, going by per capita consumption levels for both. Reason for that isnt "demand", but "want". Econ 101 - demand is want backed by purchasing power. The fact is that Discoms have no purchasing power left to buy any more than they are doing (in fact a lot of the existing purchases too are being funded on credit - look at receivalbles book of NTPC).
In other words, we have excess capacity in power (in fact in large swathes of industry as well). What we need are structural reforms to fix the demand side first.

vayu tuvan wrote:At micro level, I am really worried if what somnath is predicting is true. A few 100k USD of my committed investments are lost in the energy sector. But let us see. dekha jayega.

Investment fortunes are not necessarily the same as sectoral and macro health analysis. Investments depend on entry price, which part of the value chain you have invested in, what are your exit options etc.

somnath
BRF Oldie
Posts: 3416
Joined: 29 Jan 2003 12:31
Location: Singapore

Re: Indian Economy News & Discussion - Aug 26 2015

Postby somnath » 27 Aug 2015 08:52

Theo_Fidel wrote:Since no one else is starting a new thread....
I think what we can say is that there is 'temporary' over capacity. I guess from the power producer spread sheet that makes investment very dicey as the banker sitting in front of them will ask how do they plan to sell. Next thing they know financing application denied! From the hot money investment point of view where every quarter returns have to be delivered or one goes bust, working on investment this can seem like over capacity.

One, "hot money" doesnt fund infra projects like power.
Two, whether this situation is "temporary", or "how much temporary" is critically dependent on the speed of real economic recovery.
Three, every banker who has lent money needs to monitor quarterly cash flows - any pendency of repayment beyond 90 days necessitates classification of the loan as NPA. Its not a "hot money" phenomenon.

Singha
BRF Oldie
Posts: 60187
Joined: 13 Aug 2004 19:42
Location: Lupine but moderately dharmic

Re: Indian Economy News & Discussion - Aug 26 2015

Postby Singha » 27 Aug 2015 12:19

from a wsj paywalled article today - graph on share of world trade in goods and services

china 1995-2% , 2013-10%
japan 1995-7%, 2013-4%
soko 1995-2%, 2013-2.5%
india 1995-0.5%, 2013-2%

chaanakya
BRF Oldie
Posts: 9516
Joined: 09 Jan 2010 13:30

Re: Indian Economy News & Discussion - Aug 26 2015

Postby chaanakya » 27 Aug 2015 14:07

Theo_Fidel wrote:Since no one else is starting a new thread....
---------------


That is because everyone is afraid that economy if growing at 7%, corruption is down and NE is looking up and look east Act east policy is gaining momentum and suddenly some congoons resurface to open welcome and starts talking e-CON-Oh-Me. His brilliant anal-lysis is not going to take us anywhere. We had e-CON-oh-Me-ist MMS leading the country to ruins in 10 years with such craps. Their idea is to confuse and confound the confusion.

amit
BRF Oldie
Posts: 4324
Joined: 30 Aug 2007 18:28
Location: The Restaurant at the End of the Universe

Re: Indian Economy News & Discussion - Aug 26 2015

Postby amit » 27 Aug 2015 14:17

chaanakya wrote:That is because everyone is afraid that economy if growing at 7%, corruption is down and NE is looking up and look east Act east policy is gaining momentum and suddenly some congoons resurface to open welcome and starts talking e-CON-Oh-Me. His brilliant anal-lysis is not going to take us anywhere. We had e-CON-oh-Me-ist MMS leading the country to ruins in 10 years with such craps. Their idea is to confuse and confound the confusion.


We just had an interesting discussion on the STFUP dhaga about the perils of having an echo-chamber where the same views and data resonate. Let's not set ourselves up to follow the CON-oh-Me tradition and set up another echo chamber here.

One should be able to deal with alternative POVs with argument, logic and not by bringing in the mob, baying about conspiracy and showing rank cussedness - that's more anal than the "anal-lysis" you so deride.

Seriously why this fear about other POVs? Because they are hard to refute? Or they require a lot of intellectual heavy lifting to refute?

I personally think that the said poster looks at many things with tinted Fabian socialism lens that has resulted in India not achieving even a fraction of its potential. However, that doesn't mean he shouldn't express those views. On the contrary refuting them or arguing against them in a civil debate helps to clarify a different/alternative perspective which can then advance from sloganeering to a more intellectually rigorous thought process.
Last edited by amit on 27 Aug 2015 14:27, edited 1 time in total.

chaanakya
BRF Oldie
Posts: 9516
Joined: 09 Jan 2010 13:30

Re: Indian Economy News & Discussion - Aug 26 2015

Postby chaanakya » 27 Aug 2015 14:26

No not because of that but facts are otherwise. And we do want other PVV as long as they are not Congi POVs which has brought enough trouble for last ten years for all to see. Congress mukta India also means getting rid of such congi ideas too which comes from their anal than the lysis. The problem is that they can't see with their butts, with head in the sand.

amit
BRF Oldie
Posts: 4324
Joined: 30 Aug 2007 18:28
Location: The Restaurant at the End of the Universe

Re: Indian Economy News & Discussion - Aug 26 2015

Postby amit » 27 Aug 2015 14:33

chaanakya wrote:No not because of that but facts are otherwise. And we do want other PVV as long as they are not Congi POVs which has brought enough trouble for last ten years for all to see. Congress mukta India also means getting rid of such congi ideas too which comes from their anal than the lysis. The problem is that they can't see with their butts, with head in the sand.


Oh really non Congi POVs? Can you please explain or give an example of what those can be independent of the "so-called" Nationalistic POV?

It's easy to get rid of these Congi POVs from this forum by just running off the posters that's happened before as you well know. But how do you propose to do that in overall India? By running off all the Congi/Leftist supporters and fellow journeymen out of India?

Whether you like it not, the two competing narratives are the Fabian socialism led one that has had the overwhelming upper hand till now and a new one that's more Right of Centre that's being created as we speak. The way to win this one is not by being shill but by logic, examples and counter arguments.

Bad mouthing posters is easy. What is harder is winning the battle of ideas. That's where the heavy lifting needs to be done. It's only when you win the battle of idea that you will have a Cong mukta Bharat. That's what Modi is trying to do. When was the last time you heard him bad mouthing the Congress or its leaders? He doesn't have time for that.

JMT

chaanakya
BRF Oldie
Posts: 9516
Joined: 09 Jan 2010 13:30

Re: Indian Economy News & Discussion - Aug 26 2015

Postby chaanakya » 27 Aug 2015 14:39

Well he is doing a good job of that by showing the results people choose not to see and the other view point which was in force till May 2014 had the results for all to see. I don't know which battle of ideas you talk and what heavy lifting when outcome is for all to see. The idea that won now is doing what it can to make India congi mukta. Some might not but who cares.

amit
BRF Oldie
Posts: 4324
Joined: 30 Aug 2007 18:28
Location: The Restaurant at the End of the Universe

Re: Indian Economy News & Discussion - Aug 26 2015

Postby amit » 27 Aug 2015 14:42

To understand the battle of ideas I think you need to go through the last few pages of the previous econ dhaga, then I think you'll get an idea. How argument and analysis (not the type with the hyphen) can be countered with alternative analysis, facts and logic. When you build up a body of such literature a person reading it can decide for themselves. That's how you win the battle of idea and not by mob behaviour.

Anyway my last post on this.

chaanakya
BRF Oldie
Posts: 9516
Joined: 09 Jan 2010 13:30

Re: Indian Economy News & Discussion - Aug 26 2015

Postby chaanakya » 27 Aug 2015 14:59

I hope you can do that and bring congis to zero.

Arjun
BRF Oldie
Posts: 4193
Joined: 21 Oct 2008 01:52

Re: Indian Economy News & Discussion - Aug 26 2015

Postby Arjun » 27 Aug 2015 15:26

I think logical argumentation is always welcome. At the same time, there has to be some thought given to redlines...eg not sure how far we are prepared to tolerate insinuations like India's GDP figures being cooked up.

I guess we are in a liberal phase now perhaps for a few more months.

somnath
BRF Oldie
Posts: 3416
Joined: 29 Jan 2003 12:31
Location: Singapore

Re: Indian Economy News & Discussion - Aug 26 2015

Postby somnath » 27 Aug 2015 15:55

Arjun wrote:I think logical argumentation is always welcome. At the same time, there has to be some thought given to redlines...eg not sure how far we are prepared to tolerate insinuations like India's GDP figures being cooked up.

I guess we are in a liberal phase now perhaps for a few more months.

No one said numbers are "cooked", but the numbers are unreliable and inconsistent with other high frequency data that comes out from the same source (GOI).

The problem with arm chair "experts" is that they seldom manage to go beyond social media feeds while analysing what are intricate technical issues.

This is what Ruchir Sharma says about the new GDP data series.
http://www.moneycontrol.com/news/fii-vi ... 50741.html
"This [the GDP growth number] is the most ridiculous thing I've seen from any country in the recent past. It is hurting our credibility," he said, maintaining that India could not be growing anymore than 6 percent.

Ruchir isnt some random "left wing" hack, or even a "Fabian socialist". He is a serious market participant, someone who has 10-12 billion dollars of investment in India.

This is what Rajan and RBI have to say about the new GDP series data.
http://www.financialexpress.com/article ... der/79187/
Stating there was contradiction in the higher numbers and still below trend growth and poor corporate earnings coupled with tepid consumer demand, Rajan said, “it is a sort of discrepancy in the eyes of the world that why we still think the economy needs rate cut when it is growing at 7.5 per cent.

RBI takes policy decisions basis data like this, and they are not sure.

So high has been the backlash against the new data that the govt has set up another committee to look into the data and do an audit on the methodologies.
http://www.livemint.com/Politics/bESH32 ... eries.html

I am surprised that a "right wing" enthusiast is NOT questioning the data, as the data actually shows that the economic recovery started well within the UPA years! So essentially, accordign to the data, Chidambaram left an economy growing @ close to 7%!
http://mospi.nic.in/Mospi_New/upload/In ... s-2015.pdf

Either the data is correct (and only Fabian socialists and LEft wingers are describing it as incorrect) - then UPA did a pretty good job of engendering a recovery. Or the data is a problem, we recognise that (the govt itself does) and we deal with it instead of beating loud drums that the economy is growing @ headline 7% and everything is hunky dory. Both cant be true at the same time!

See this is the real problem. The lack of basic intellectual rigour and ability causes taking up positions that actually go against your own positions.

Arjun
BRF Oldie
Posts: 4193
Joined: 21 Oct 2008 01:52

Re: Indian Economy News & Discussion - Aug 26 2015

Postby Arjun » 27 Aug 2015 16:22

In the midst of all of those links I wonder why the latest in that series got missed out: GDP numbers not flawed, CSO on right track: Pronab Sen

Clearing the air over the new Gross Domestic Product (GDP) numbers, National Statistical Commission (NSC) chairman Pronab Sen today said that Central Statistics Office (CSO) is following the correct methodology for computing national accounts and is on the right track.

Earlier, NITI Aayog Vice-Chairman Arvind Panagariya had also echoed similar views and said,"scientifically speaking, we can't reject a change that is methodologically sound just because the outcome it produces fails to agree with our intuition. In such circumstances, we must critically examine our own intuition."


2013-14 is puzzling, as Arvind Subramaniam has also suggested. However, it is hardly the done thing to dismiss all arguments of India's current outperformance by questioning GOI data.

amit
BRF Oldie
Posts: 4324
Joined: 30 Aug 2007 18:28
Location: The Restaurant at the End of the Universe

Re: Indian Economy News & Discussion - Aug 26 2015

Postby amit » 27 Aug 2015 16:31

Somnath a lot of the GDP number controversy has been linked with the different methodology that's been adopted and the different base year. And there's a school of thought that some of the discrepancies could be due to an increase in productivity that's not been factored in.

The point remains that almost all international as well as Indian rating agencies have been predicting a GDP growth rate in and around 7-8 per cent for the current fiscal. Moody's cut its rate but it's still at 7 per cent (as opposed to the previous 7.5 per cent). Let's see what the government committee comes up with. I think you will also agree that the CSO's methodology is not the best in the world. The funny thing is that when China changed its GDP reporting methodology in around 2007-2010 timeframe, which resulted in a massive jump in the numbers, nobody blinked an eyelid.

I would give some slack on what Ruchir is saying, not because he doesn't understand the subject but being a fund manager you never know if he's trying to talk up or talk down the market. I have healthy scepticism on his type when they go into economic analysis/prediction.

Regarding the RBI gov's view point I must say that it looks to me that you are doing a bit of selective reading. In the same report he says:

Explaining the rationale for rate cut to spur growth, which the RBI has revised downward to 7.6 per cent from 7.8 per cent for this fiscal, Rajan said the current growth rate is below potential which is around 8.5 per cent.
Stating there was contradiction in the higher numbers and still below trend growth and poor corporate earnings coupled with tepid consumer demand, Rajan said, “it is a sort of discrepancy in the eyes of the world that why we still think the economy needs rate cut when it is growing at 7.5 per cent.
“Most economies growing at 7-7.5 per cent are just going gang-busters and the issue really is to restrain growth rather than to accelerate growth. We still have weak investment, it is very tepid and we haven’t seen a strong pick up,” Rajan said.
Attributing the higher 7.5 per cent growth numbers to special factors like excise collection in the final month of the past year, Rajan said “there is some discussions of how much of the Q4 growth includes special factors in the last quarter, such as excise taxes and subsidies.


Now that does not sound, to me at least, that he thinks the numbers are "unreliable". The fact that it's inconsistent with other high frequency data could be due to quality of this high frequency data as well?

Even though I'm not a "left wing" hack and certainly not a "Fabian socialist" :lol: I would certainly question anyone who thinks that the economy magically became better after the current government won the elections last year! Good work on the economy - if it's happening now - will begin to show up only around 2017-18 fiscal or so.

Let's see how this rolls. I urge you to look at the larger picture. The current government is trying a number of different/new approaches. As to whether they are successful or not only time will tell but I think even you would agree that the previous approaches didn't work. The last 10 years especially the last five were just a missed opportunity. I hope the current five doesn't end up the same.

somnath
BRF Oldie
Posts: 3416
Joined: 29 Jan 2003 12:31
Location: Singapore

Re: Indian Economy News & Discussion - Aug 26 2015

Postby somnath » 27 Aug 2015 16:50

Arjun wrote:2013-14 is puzzling, as Arvind Subramaniam has also suggested. However, it is hardly the done thing to dismiss all arguments of India's current outperformance by questioning GOI data.

Only the 2013-14 data in an entire series is wrong, rest is muscular performance! :rotfl: Anyone with a modicum of familiarity with statistics will not make such assertions.

Problem with "google experts", is, yet again, absence of intellectual rigour. High frequency data like corporate topline growth (@ single digits), manufacturing capacity utilisation (at multi year lows), IIP growth (at low single digits), infrastructure growth (again @ low single digits, sometimes negative) and a "public pleading for policy rate cuts" dont match up to a headline growth of 7%.

But why bother with such minutiae that professionals (like Ruchir Sharma) need to deal with? You need to deal only with the social media!

Arjun
BRF Oldie
Posts: 4193
Joined: 21 Oct 2008 01:52

Re: Indian Economy News & Discussion - Aug 26 2015

Postby Arjun » 27 Aug 2015 16:57

somnath wrote:Only the 2013-14 data in an entire series is wrong, rest is muscular performance! :rotfl: Anyone with a modicum of familiarity with statistics will not make such assertions.

Why do you assume I am saying it is wrong? The numbers need to be explained - which is exactly what even Arvind Subramanian has been saying - because the differential between perceived actuals on ground and the new GDP rate is obviously highest for that year. But, if we say methodology is correct then obviously it has to be correct both for current year and previous year.

somnath
BRF Oldie
Posts: 3416
Joined: 29 Jan 2003 12:31
Location: Singapore

Re: Indian Economy News & Discussion - Aug 26 2015

Postby somnath » 27 Aug 2015 17:07

amit wrote:And there's a school of thought that some of the discrepancies could be due to an increase in productivity that's not been factored in.

Who knows, but improbable. If TFRs had gone up, the absolute GDP numbers would have too. The funniest thing about the new data is that there isnt a big difference in the nominal GDP values, but growth rates have magically gone up!

amit wrote:The point remains that almost all international as well as Indian rating agencies have been predicting a GDP growth rate in and around 7-8 per cent for the current fiscal. Moody's cut its rate but it's still at 7 per cent (as opposed to the previous 7.5 per cent).

People have adjusted their models to the new GDP series (they dont have a choice, if the official data repository has changed it). Hence, the growth numbers have been adjusted upwards with the new data series. If we had continued with the older data series, we would have quoted numbers basis the old series (which might have been 6%, or 5).

amit wrote:I would give some slack on what Ruchir is saying, not because he doesn't understand the subject but being a fund manager you never know if he's trying to talk up or talk down the market. I have healthy scepticism on his type when they go into economic analysis/prediction.

Ruchir is a buy side guy, usually he has a vested interest in "talking up" the market. Everyone could have vested interests (though I wonder what his would be to "talk down" a large part of his portfolio). In any case, he isnt the only one.

amit wrote:Now that does not sound, to me at least, that he thinks the numbers are "unreliable". The fact that it's inconsistent with other high frequency data could be due to quality of this high frequency data as well?

The RBI guv is part of the govt. He cant possibly bluntly tell TCA Ananth publicly that the latter doesnt make sense! But read the operative part of his statement
there was contradiction in the higher numbers and still below trend growth and poor corporate earnings coupled with tepid consumer demand, Rajan said, “it is a sort of discrepancy in the eyes of the world that why we still think the economy needs rate cut when it is growing at 7.5 per cent.
“Most economies growing at 7-7.5 per cent are just going gang-busters and the issue really is to restrain growth rather than to accelerate growth. We still have weak investment, it is very tepid and we haven’t seen a strong pick up
,” Rajan said.


amit wrote:I would certainly question anyone who thinks that the economy magically became better after the current government won the elections last year! Good work on the economy - if it's happening now - will begin to show up only around 2017-18 fiscal or so.

True, but for the "bhakts", the economy is already growing @ 7%+, and time to declare victory! The fact is that if these numbers are correct, Chidambaram left a healthy economy behind! Heck, even the fiscal deficit number projected by Chidambaram for was accpeted by Arun Jaitley, and the number was met!

The fact is, high frequency numbers (like corporate earnings, business confidence etc) have better creds because they are better collected and audited for accuracy. In general, large macro numbers like GDP involve a whole set of estimations.

amit wrote:As to whether they are successful or not only time will tell but I think even you would agree that the previous approaches didn't work. The last 10 years especially the last five were just a missed opportunity. I hope the current five doesn't end up the same.

Yes and no. There have been missed opportunities. As of now, the current govt shows no indications of any radical break from the past. The big idea seems to be "we will administer these things better than the Congress". Policy interventions are too few. Even the big "fights", Insurance FDI, GST are legacies of the previous govt being completed.

I for one think that we would still do well, because we are on a cyclical upturn. But structural changes? We are still waiting.

somnath
BRF Oldie
Posts: 3416
Joined: 29 Jan 2003 12:31
Location: Singapore

Re: Indian Economy News & Discussion - Aug 26 2015

Postby somnath » 27 Aug 2015 17:11

Arjun wrote:But, if we say methodology is correct then obviously it has to be correct both for current year and previous year.

Indeed, in which case the UPA left a really robust economy! No reason to damn them at least on that front.

I for one, dont believe that. The downturn was cyclical, and the last months of UPA saw an enormous crash of consumer and business confidence - and economies are finally driven by sentiment and confidence. We couldnt have had any meaningful recovery. If we did, it would be a miracle.

There are green shoots of a cyclical upturn now - primarily on account of lower oil prices and all round better sentiment with a new govt. But high frequency numbers are nowhere close to match up to 7%-8% + growth rates. These guys need to push on with the structural stuff to take advantage - they arent doing that, yet!

Arjun
BRF Oldie
Posts: 4193
Joined: 21 Oct 2008 01:52

Re: Indian Economy News & Discussion - Aug 26 2015

Postby Arjun » 27 Aug 2015 17:27

If we go by the latest numbers, the growth rate over last 5 years is as follows: 10.3 6.6 5.1 6.9 7.4

UPA seems to have paid for the sins of its mismanagement of the economy early in its second term. It may well have reigned in the deficit towards the end and managed to reverse direction on growth - but the damage was done as far as experience on the ground with consumers and businesses.

Theo_Fidel
BRF Oldie
Posts: 7568
Joined: 31 Mar 2006 02:15
Location: MO,US,NCJ TN

Re: Indian Economy News & Discussion - Aug 26 2015

Postby Theo_Fidel » 27 Aug 2015 18:04

Meanwhile....

The fight for POSCO goes on. 1% of GDP right here folks. Need to win this one. Not sure what 'current format' means....
to this day I don't understand how this project ran into trouble. It should have been up and running by now.

http://indianexpress.com/article/busine ... stalemate/

Talks between the Prime Minister’s Office (PMO), Odisha government and South Korean company Posco on Tuesday to revive the firm’s proposed 12 million tonne steel project ended in a stalemate.

At a meeting convened by the PMO to explore ways to revive the sagging fortunes of Pohang Steel Company or Posco’s project worth Rs 52,000 crore in Odisha ‘s Jagatsinghpur district, the South Korean company’s India representatives said the firm cannot proceed on the steel plant “in the current format.” They argued that project has already sustained a huge delay of ten years despite sustained efforts for securing land and ensuring raw material security.

Supratik
BRF Oldie
Posts: 4752
Joined: 09 Nov 2005 10:21
Location: USA

Re: Indian Economy News & Discussion - Aug 26 2015

Postby Supratik » 27 Aug 2015 19:05

X-post

Smart city list out. It seems that Bangalore, Kolkata, Delhi (not NDMC). Gurgaon didn't make it.

http://www.thehindu.com/news/national/c ... on&ref=yfp

A_Gupta
BRF Oldie
Posts: 9677
Joined: 23 Oct 2001 11:31
Contact:

Re: Indian Economy News & Discussion - Aug 26 2015

Postby A_Gupta » 27 Aug 2015 19:17

So, which is it?

1. The corporate performance numbers are tepid, and so the 7% GDP growth rate is problematic, and is indicative of serious data problems.

2. The 7% GDP growth rate that India has in spite of tepid corporate performance numbers indicates that the economy is performing below potential, and India could be growing at 8.5%.

chaanakya
BRF Oldie
Posts: 9516
Joined: 09 Jan 2010 13:30

Re: Indian Economy News & Discussion - Aug 26 2015

Postby chaanakya » 27 Aug 2015 19:30

Arjun wrote:I think logical argumentation is always welcome. At the same time, there has to be some thought given to redlines...eg not sure how far we are prepared to tolerate insinuations like India's GDP figures being cooked up.

I guess we are in a liberal phase now perhaps for a few more months.

Especially when talking about virility and currency and calling bhakta etc , the agenda is clear.logical argument are always better. I agree. I am not here to contribute unless I feel so. But is this what one would call logical argument:

Some samples of craps posted here

It doesnt help that the current govt is full of chaps that equate the value of the currency to some sort of national virility.


Exchange rate isnt a symbol of virility.

When members didn't get his reference , perhaps, he clarified it more by including his target.
Many politicians, Modi included have conflated a strong currency with economic virility.


And in STFUP

It certainly doesnt get done by putting in rank invalids (like Smriti Irani) to wage an intellectual battle Anyways,

What he has to tell about SoGa and RaGa? Are they super intellectuals leading the country behind MMS.


Actually he should be dissecting economic policies of UPA era and how it is causing immense harm. And but for that India might have achieved 10% growth. We had too many e-CON-oh-Me-Ist playing pied piper, including NAC, which he doesn't want to even castigate.

What this Govt has done so far:

Gave experts freedom to decide while giving his mind on issues.
Tried to level palying field and ease of doing things, simple matters, small things but big for small people.
try to Eliminate corruption
encourage digitalisation in big way.


It is my understanding that since the days of PVNR we have had broad consensus on reforming Indian economy and the ways and means to reform it. Congis could not have deviated from the path that one of their disowned son had laid before all. BJP might have differed on details in some respect but they did stuck to the path. What happened in NDA-1 was showing in UPA-1. What happened in UPA-1 was showing in UPA-1 and 2 both , on economy and security. Else Congis would not have launched NAREGA. The ills are continuing as congis deviated from reforms path in encouraging subsidy regime and when it became obviously unsustainable they tried UIDAI and DBT to limit the outflow. But main clincher was corruption which has damaged economy .It killed UPA in the process. But they have left too many IEDs which needs to be negotiated carefully. Now every crisis would be shown as failure of NaMo. that is what these so called e-con-oh-me-ist is out to do again coming from their winter hibernation. They don't want to give time to see the course correction and its result. For them it would be too late.
As for cooking up figures, he should be knowing better. Afterall his ideal economist was in charge of cooking figures for ten years. Else why would we go for NREGA, FML, FSA, RTE,Advance Taxation in addition to CWG, 2G, 3G, 4G, Coalgate, railgate and what not.

chaanakya
BRF Oldie
Posts: 9516
Joined: 09 Jan 2010 13:30

Re: Indian Economy News & Discussion - Aug 26 2015

Postby chaanakya » 27 Aug 2015 19:38

And of course he would not have heard of Jayanthi Tax, pending projects of national and economic importance on account of land acquisition delay or regulatory delay or environment clearance during his beloved govt's time. he had no advice to offer as he is pontificating , read crapping, now.

Supratik
BRF Oldie
Posts: 4752
Joined: 09 Nov 2005 10:21
Location: USA

Re: Indian Economy News & Discussion - Aug 26 2015

Postby Supratik » 27 Aug 2015 20:34

@A-gupta,

It is most likely the latter as India may be corrupt but not that corrupt. If policies and execution are in place 8-10% growth for sustained periods at this stage of India's development is possible. That is what happened to Japan, China, S. Kor and SE Asia. It is more difficult to make the transition from middle income to high income which is what China is facing or going to face next.

somnath
BRF Oldie
Posts: 3416
Joined: 29 Jan 2003 12:31
Location: Singapore

Re: Indian Economy News & Discussion - Aug 26 2015

Postby somnath » 27 Aug 2015 20:58

A_Gupta wrote:So, which is it?

1. The corporate performance numbers are tepid, and so the 7% GDP growth rate is problematic, and is indicative of serious data problems.

2. The 7% GDP growth rate that India has in spite of tepid corporate performance numbers indicates that the economy is performing below potential, and India could be growing at 8.5%.

Headline GDP is an aggregation of growth in all sectors. Corporate earnings are a subset of GDP, but given the spread of listed stock in India across sectors, is a good proxy. The only way #2 can be right is if the "unlisted enterprises/sectors" of the economy are doing dramatically better than the listed ones. Tough to conclude that, even in most optimistic terms.

Arjun wrote:If we go by the latest numbers, the growth rate over last 5 years is as follows: 10.3 6.6 5.1 6.9 7.4

These are actually outstanding numbers, if true. Across multiple global crises (European credit, Fed taper tantrum) to average close to 7% (and the lowest of 5.1% ) is very good going. There should be very little to complain about UPA!

But it didnt "feel" that good, did it? Neither corporates, nor individuals, for that matter investors - no one felt we are doing so well. Something gives?

chaanakya wrote:Some samples of craps posted here

Quote:
It doesnt help that the current govt is full of chaps that equate the value of the currency to some sort of national virility.


Quote:
Exchange rate isnt a symbol of virility.

Well, the tweeting refrain of the PM candidate during those days was how the value of INR resembles the then FM's age! Backed up by many speeches where the depreciation of INR was bemoaned, and the fault laid at the door of the govt.

Now, exchange rate is a complex economic variable, more so with India being a net importing country. But all those barbs around value of INR come back to haunt the PM today, with INR trading @ 66.

A_Gupta
BRF Oldie
Posts: 9677
Joined: 23 Oct 2001 11:31
Contact:

Re: Indian Economy News & Discussion - Aug 26 2015

Postby A_Gupta » 27 Aug 2015 21:29

http://www.moneycontrol.com/news/econom ... 77741.html
The Reserve Bank of India today released its Annual Report 2014-2015 and for the first time, it comes with an overview from the Governor, Raghuram Rajan, himself. The annual report informs what the RBI intended to accomplish during the past year and what was actually done. Furthermore, it also lays out proposals for the coming year. According to the report, the central bank believes India's growth outlook is improving gradually and says the real activity indicators are backing its 7.6 percent gross domestic product (GDP) projection.

chaanakya
BRF Oldie
Posts: 9516
Joined: 09 Jan 2010 13:30

Re: Indian Economy News & Discussion - Aug 26 2015

Postby chaanakya » 27 Aug 2015 21:43

somnath wrote:

chaanakya wrote:Some samples of craps posted here

Quote:
It doesnt help that the current govt is full of chaps that equate the value of the currency to some sort of national virility.


Quote:
Exchange rate isnt a symbol of virility.

Well, the tweeting refrain of the PM candidate during those days was how the value of INR resembles the then FM's age! Backed up by many speeches where the depreciation of INR was bemoaned, and the fault laid at the door of the govt.

Now, exchange rate is a complex economic variable, more so with India being a net importing country. But all those barbs around value of INR come back to haunt the PM today, with INR trading @ 66.


Guess what, I always suspected that. It was not economic analysis as much as it was trying to repay the barbs. Good that you made it clear. But probably Economists are way too far from what vision NaMo projects.

A_Gupta
BRF Oldie
Posts: 9677
Joined: 23 Oct 2001 11:31
Contact:

Re: Indian Economy News & Discussion - Aug 26 2015

Postby A_Gupta » 27 Aug 2015 21:48

From the RBI Annual Report for 2014-15

Code: Select all

GVA at Basic Prices (Supply Side), year 2014-15

Sector                                          Growth rate         Share of
                                                                    Economy (%)
Agriculture, forestry and fishing               0.2                     16.1
Industry                                        6.6                     23.3
Services                                        9.4                     60.6
GVA at basic prices                             7.2                    100.0


Some outstanding sub-areas of growth

Code: Select all

VA at Basic Prices (Supply Side), year 2014-15

Sector                                         Growth rate       Share of
                                                                 Economy (%)
Manufacturing                                     7.1            18.1
Electricity,gas, water supply & other utilities   7.9             2.3

Trade, hotels, transport, communication &
services related to broadcasting                 10.7            19.4

Finance, real estate & professional services     11.5            20.5

Public Administration, defence & other services   7.2            12.6
Last edited by A_Gupta on 28 Aug 2015 02:02, edited 2 times in total.

A_Gupta
BRF Oldie
Posts: 9677
Joined: 23 Oct 2001 11:31
Contact:

Re: Indian Economy News & Discussion - Aug 26 2015

Postby A_Gupta » 27 Aug 2015 22:15

RBI Governor's speech, August 24:
https://www.rbi.org.in/Scripts/BS_Speec ... spx?Id=969
Let me conclude. My focus on the challenges in ensuring sustainable growth should not detract from the tremendous progress we have made. There is much to be optimistic about, including the massive investments that are starting in infrastructure, the tremendous sweep of information technology across every facet of Indian life, and the radical changes that are taking place in the financial sector. The Indian economy is full of possibilities, even as much of the world is mired in pessimism. Indeed, I have been arguing that the fragility of the world economy is precisely because it has focused on quick fixes rather than deep reform.

At the same time, we should not delude ourselves into thinking our work is done, or postpone hard choices to a seemingly easier tomorrow. The question for us as a society is whether we have the discipline to do what is necessary at a time when global conditions are propitious – commodity prices look like they will stay low for a time, helping the fight against inflation, and there is plenty of money around the world and at home, looking for investments, including in distressed assets, that can help us clean bank and corporate balance sheets. As India strives to regain its place in the ranks of prosperous nations, we must remember that what sets poor nations apart from the rich is not people or resources or even luck but good governance, which comes from strong frameworks and strong institutions. A summary explanation of the economic problems of the recent past is that they arose because India outgrew its institutions. A summary of the Government and the Reserve Bank’s measures to restore sustainable growth is that we are building the necessary institutions. Thank you.
Last edited by A_Gupta on 27 Aug 2015 22:44, edited 1 time in total.

nachiket
BRF Oldie
Posts: 5803
Joined: 02 Dec 2008 10:49
Location: Соединенные Штаты Америки

Re: Indian Economy News & Discussion - Aug 26 2015

Postby nachiket » 27 Aug 2015 22:26

A_Gupta wrote:http://www.moneycontrol.com/news/economy/indias-gdp-improving-76-growth-likely-rbi-guv-rajan_2777741.html
The Reserve Bank of India today released its Annual Report 2014-2015 and for the first time, it comes with an overview from the Governor, Raghuram Rajan, himself. The annual report informs what the RBI intended to accomplish during the past year and what was actually done. Furthermore, it also lays out proposals for the coming year. According to the report, the central bank believes India's growth outlook is improving gradually and says the real activity indicators are backing its 7.6 percent gross domestic product (GDP) projection.

But we are being told here that the GDP growth numbers and projections are cooked up and nobody including the RBI believes them. It seems someone forgot to tell that to the RBI governor.

A_Gupta
BRF Oldie
Posts: 9677
Joined: 23 Oct 2001 11:31
Contact:

Re: Indian Economy News & Discussion - Aug 26 2015

Postby A_Gupta » 27 Aug 2015 22:32

My apologies, I left off the link for the RBI Annual Report for 2014-15, it is available via this page:
https://www.rbi.org.in/Scripts/BS_Press ... prid=34831

A_Gupta
BRF Oldie
Posts: 9677
Joined: 23 Oct 2001 11:31
Contact:

Re: Indian Economy News & Discussion - Aug 26 2015

Postby A_Gupta » 27 Aug 2015 22:33

nachiket wrote:But we are being told here that the GDP growth numbers and projections are cooked up and nobody including the RBI believes them. It seems someone forgot to tell that to the RBI governor.


Precisely because there was a controversy, I went looking for data; and by chance, the RBI Annual Report was released like just now.

gashish
BRFite
Posts: 256
Joined: 23 May 2004 11:31
Location: BRF's tailgate party, aka, Nukkad thread

Re: Indian Economy News & Discussion - Aug 26 2015

Postby gashish » 28 Aug 2015 02:46

This topic on new and old GDP data series was discussed to death just few months ago.

somnath wrote:
A_Gupta wrote:So, which is it?

1. The corporate performance numbers are tepid, and so the 7% GDP growth rate is problematic, and is indicative of serious data problems.

2. The 7% GDP growth rate that India has in spite of tepid corporate performance numbers indicates that the economy is performing below potential, and India could be growing at 8.5%.

Headline GDP is an aggregation of growth in all sectors. Corporate earnings are a subset of GDP, but given the spread of listed stock in India across sectors, is a good proxy. The only way #2 can be right is if the "unlisted enterprises/sectors" of the economy are doing dramatically better than the listed ones. Tough to conclude that, even in most optimistic terms.


And that is what happened as per here:

The new GDP is for real

Changes in estimation of growth in WRT

Hence, the fact that Humpty Dumpty could not be put together again, the search for a new method of computing GDP for WRT, and the arrival of the new “order”—henceforth, GDP in WRT would be computed on the basis of growth in sales taxes. What was nominal sales tax growth in the doubtful high growth year of FY14? A healthy 17.2%; with GDP deflator inflation of 6.3%, this is a high 10% real growth for 20% of the economy which is not on the radar screen of most analysts and market players. While analysts were looking at corporate balance sheets to get a sense of how India was growing, the real story was under their feet in unorganised Bharat.



Estimating growth in Manufacturing:

the other big change is for manufacturing. Here, the explanation is simply usage of much better balance sheet data, available for more than 500,000 companies (the MCA-21 data base). Previously, the CSO relied on an old and aged warhorse to deliver information on industrial production, IIP data; now, the government harnesses the modern IT sector by processing balance sheet information on heretofore unimaginable large number of companies. The “feel” conclusion of a slow economy was derived from insipid IIP growth for FY14—a -0.1%—hence, the angst in the pink pages and among TV anchors. Manufacturing growth on the basis of MCA-21 balance sheet data reveals a recovering economy—growth of 5.3%. In FY15, the same data source reveals manufacturing growth at 6.8%.

A_Gupta
BRF Oldie
Posts: 9677
Joined: 23 Oct 2001 11:31
Contact:

Re: Indian Economy News & Discussion - Aug 26 2015

Postby A_Gupta » 28 Aug 2015 03:52

^^^ Thanks, gashish!

amit
BRF Oldie
Posts: 4324
Joined: 30 Aug 2007 18:28
Location: The Restaurant at the End of the Universe

Re: Indian Economy News & Discussion - Aug 26 2015

Postby amit » 28 Aug 2015 06:05

Ok so now the cloud over the GDP numbers have been cleared by the committee set up by the Government itself to clear the air. All news outlets are reporting it but this Business Standard report has an interesting comment from Sen Babu that I would like to point out.

However, he pointed out that an inherent issue with the GDP numbers arising out of under-coverage of ASI remained unaddressed, resulting in the underestimation of manufacturing growth and hence, the national accounts numbers. This means that GDP numbers were, in fact, understated whereas the criticism was that these overestimated the economic growth.


Apart from that, there are several interesting nuggets in the report which I would like to point out here for record

As many as 70,000 manufacturing companies registered under the Companies Act have not been captured under the ASI because these establishments aren't registered under the Factories Act. The ASI tracks only the companies listed under the Factories Act.

"The discrepancy was discovered after we compared the two lists. Clearly, the registration process is faulty. It implies the entire ASI list is faulty. There would be serious discrepancies in the number of proprietorship and partnership firms as well," said the source.


Moreover, the ASI is used to weigh the wholesale price index (WPI), used as a deflator for national accounts to give GDP numbers adjusted to inflation, technically called real GDP. "So, all this discrepancy is arising out of infirmity of the ASI and manufacturing growth will be underestimated. We need to correct this," the key source said.


And finally:

India's GDP numbers were revised with the base year of 2011-12 from the earlier 2004-05. While it is a routine matter to revise the base year, the methodology of calculating GDP itself was changed. For the purpose of growth, the new methodology takes GDP at market prices into account, which include indirect taxes and excludes subsidies.


The last part is important, the use of Market prices instead of Factor prices to calculate GDP is an universal trend - for example all other Bric nations use this methodology.

I think one needs to understand why differentiation between market and factor prices is important. Googal Chacha has a very elegant explanation for this, I'll use it instead of trying to write one down on my own.

There is one important difference that arises when calculating the level of GDP from the spending side of the economy rather than summing the values added in production. This difference arises because the price paid by consumers for many goods and services is not the same as the sales revenue received by the producer. There are taxes that have to be paid, which place a wedge between what consumers pay and producers receive.

Taxes attached to the transactions are known as indirect taxes. Thus, if a consumer pays 100 for a meal in a restaurant the owner may receive only 86, the remaining 14 will go to the government in the form of VAT. The term factor cost or basic price is used in the national accounts to refer to the prices of products as received by producers. Market prices are the prices as paid by consumers.

Thus, factor cost or basic prices are equal to market prices minus taxes on products plus subsidies on products.


I think a simple reading of this will show why market price is a more accurate measure of GDP, even though it "inflates" the number. Taxes after all part of the economy!

When the new GDP numbers came out, I remember doing a small informal study as to why the numbers didn't tally with the IIP numbers - the one data point which resulted in the initial angst shared by folks like Ruchir Sharma. I found an interesting point. The IIP data was in factor prices while the GDP number was in market prices! Later I read an interesting analysis on Live Mint (I'll see if I can find the link) which confirmed this point and also pointed out some of the discrepancy could be due to productivity gains in both the organised as well as unorganised sector. Well Sen Babu's report confirms this with the data on the unorganised sector!

One final point. Somnath mentions that if the economy grew as good as it did then some credit of it should go to Chidambaram. I most definitely think it should. Economic growth doesn't happen because someone presses a switch. It's the result of policies that are put in place earlier. I would say that in his second term as FM Chidambaram tried his best, even though to large extent he was p!ssing in the wind. That's a hard act to follow considering the NGO style adopted by RaGa in his "assertive" avatar. One needs to add that the sustained growth period enjoyed by UPA1 was also the result of the policy measures put in place by the ABV government. In the same vein the policy disasters of the UPA1 resulted to a large extent - and compounded by the global slowdown - of the disastrous economic performance of the UPA2.

Theo_Fidel
BRF Oldie
Posts: 7568
Joined: 31 Mar 2006 02:15
Location: MO,US,NCJ TN

Re: Indian Economy News & Discussion - Aug 26 2015

Postby Theo_Fidel » 28 Aug 2015 06:12

GDP should always be looked as a time series. We won't know the import of today's GDP until several years in the future. So whats the point of discussing it now. Even the final word on UPA2 is probably too early to make final judgements on though obviously many projects were hanging in limbo and ran into trouble during UPA2.

amit
BRF Oldie
Posts: 4324
Joined: 30 Aug 2007 18:28
Location: The Restaurant at the End of the Universe

Re: Indian Economy News & Discussion - Aug 26 2015

Postby amit » 28 Aug 2015 06:22

Unfortunately I did not have enough time in my hands when I was replying earlier on this thread. :-?

Here's another interesting report from April this year, that's when the controversy was at its peak. It quotes Chief statistician TCA Anant. I hope he is sufficiently credible and at par with Ruchir Sharma who also made his comments around the same time. :D

I'll just post excerpts for reference purposes. Link

The background:
India's economic growth was revised to 5.1% in 2012-13 and 6.9% in 2013-14 in the new GDP series. The old data had pegged growth at 4.5% and 4.7%, respectively. Advance estimates for 2014-15 indicate growth at 7.4%.


The criticism:
The new series updates the base year to 2011-12 from 2004-05 and shifts to the internationally accepted market price system as opposed to the factor cost method followed earlier. Experts have doubted the data, arguing that growth under the new series is not consistent with high-frequency indicators such as industrial production, which increased 2.6% in the first 11 months of 2014-15.


This is what TC Anant said:
"Otherwise, it is like comparing apple to oranges. It is entirely possible that 5% growth rate in the old series is qualitatively in the same ballpark as 6.5% or 7% in the new series. It is possible. I don't know," he said at the Data Users' Conference attended by several economists and experts. "...the new series of national accounts reflects or represents a series which is structurally very different from the past


At this moment, we do not have enough information to be able to give you clearer understanding of longrun growth dynamics which emerges in the new series vis-avis the past. That exercise...we are still working," said Anant. The exercise to produce an indicative back-series will be partly assumption-driven, given the non-availability of the database used to compute the new national accounts series.


Well the committee under Sen Babu has provided updated information.

More background information:

The CSO started using MCA21 database of 5.2 lakh companies to compute manufacturing growth, in addition to date from the annual survey of industries. This led to a sharp revision in manufacturing growth to 5.3% in FY14 compared with a contraction of 0.7% estimated in the earlier series. The share of manufacturing in the economy went up to 17.3% in 2013-14 against 12.9% in the older series.


Apologies for using both color and bold. But this upping of the number from 12.9% to 17.3% is hugely important.

Another shift was in corporate manufacturing data. The figures were taken into account using enterprise-based coverage against an establishment-based approach in the earlier series. "Earlier establishment-based data was better captured in ASI than enterprise- based, which was relatively a small sample. Now, with corporate database, our coverage for enterprise is almost universal," Anant said. In the establishment approach, calculation of production was done plant by plant.


Moreover, data on value added is now available for part of the government sector and the corporate sector. Until the new series, neither of these two segments was captured entirely


Now some fodder for the conspiracy theorists :twisted:

Morgan Stanley has said it is better to look at 'broad-based indicators of growth' to assess the momentum of expansion instead of relying only on the new GDP numbers. It questioned the quickening of growth under the new series. "This acceleration in growth is not corroborated by the underlying broad-based growth indicators," the US bank said in a report, which estimates India growing at 7.9% in FY16 under the new GDP series and 8.4% in FY17


Return to “Technology & Economic Forum”

Who is online

Users browsing this forum: bharotshontan and 11 guests