Indian Economy News & Discussion - Nov 27 2017

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Yagnasri
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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Yagnasri » 11 Jun 2019 09:59

In respect of the Property Tax it must be at least levied based on some clear formula applicable to the entire state ( as it comes to under Local admin which is one of the state subjects). 0.25% for Individual owners of the total value with no distinction on the kinds of the properties. Companies Trusts etc entities shall be taxed at a higher % like 1% p.a. as we shall actively discourage ownership of land by artificial persons like companies for speculation purpose. It will stop unproductive use by way of investment in the real estate.

Stamp duty shall be removed and registration charges also shall be on cost basis. Both steps will create a very health real estate market. GoI shall stop funding any amount to the local administration. Local administrations shall be self funded by way of Property Tax and other charges like local taxes. It will need a constitutional amendment and face lot of opposition. But the idea is worth considering.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A Nandy » 11 Jun 2019 10:04

https://www.business-standard.com/artic ... 034_1.html

Commerce and Industry Minister Piyush Goyal, a week after taking charge, has taken more than 12 major decisions to boost exports and boost industrial growth.

Work on some of these decisions, ranging from fast-tracking anti-dumping investigations into goods in the micro, small and medium (MSME) category to initiating research on reducing import dependence, will begin as early as next week, officials say. Most of the decisions received the minister's nod after Goyal held a 10-hour meeting with export promotion councils, industry bodies and officials from the Centre and state governments.


The minister has asked officials to work with state governments to identify 50 manufacturing clusters across the country. “Priority will be given to micro, small and medium enterprises and most clusters will have a mix of various industries, catering to a complete value chain in a particular geography,” a Department for Promotion of Industry and Internal Trade (DPIIT) official said.

Many of these clusters will focus on import substitution, especially for goods in the engineering, textiles and electronics sectors.

“Considering that electronics imports are the largest category of inbound goods after crude oil and gold, we plan to dovetail the new manufacturing clusters with the electronics manufacturing cluster scheme of the Ministry of Electronics and Information Technology,” the official added.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Prem » 11 Jun 2019 10:24

https://economictimes.indiatimes.com/ma ... t-cap-race
TCS beats big blue in market cap race


After Monday’s trade, TCS’ market cap stood at Rs 8,37,198 crore, or over $120.49 billion, on the National Stock Exchange. In midday trade on the New York Stock Exchange, IBM’s market value was about $119.8 billion. Mumbai-based TCSNSE 0.44 % still lags Accenture, which has a market cap of a little over $124 billion.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A Deshmukh » 11 Jun 2019 10:41

Prasad wrote:Car sales have fallen drastically over the last few months. Given that rural demand propped it up when it was going up, wonder what has happened for the current state to come about.


I believe Govt has made mandatory to buy insurance for 3 years now for new cars. (5 years for 2-wheelers).
this increases the cost of acquisition by Rs.10-20k or more depending on the car.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Yogi_G » 11 Jun 2019 11:20

Prasad wrote:Car sales have fallen drastically over the last few months. Given that rural demand propped it up when it was going up, wonder what has happened for the current state to come about.


I have a 10 year old car now. So far content with OLA and UBER even with their sops gone and crazy prices. Motorcycle commute to office is half the time of the drive with car. Taxation is 18% in Karnataka for new car. Exploring car lease policy for company which is very attractive but then am bound to company for next few years. Add to it the BSVI coming up, so one confused car buyer now. Plus waiting for new generation scorpio or XUV due next year with BSVI compliance. Am I putting off buying a car out of financial distress? No.

Interesting info is that commercial vehicles sales have gone up but consumer vehicles have come down. Interesting statistic.

The NPAs of the banks coming down "officially" is great news. Hope NPAs dont go off the radar as growth begins picking up over next few months as the reforms of the last years start kicking in with greater force.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Yogi_G » 11 Jun 2019 11:27

For greater growth apart from what Modi has already achieved one thing is absolutely necessary - labour reforms. I was caught in the traffic on hosur road when there were left promoted agitations on top of the declared changes to the EPF policy in 2016. My car glass was almost broken by "protestors". I then realized what a herculean effort it would be for Modi to bring in labour reforms. Heck, the left could well ride it to come back to prominence and Modi needs to tread cautiously here. A consistent policy through the lendth and breadth of the nation which will well usher in corporate friendly and abuse preventive scheme of things is very welcome and hope it flushes the commie labour union camps in Kerala, WB and other places along with it.

24 hour power availability is right now a mirage. We are DEFINITELY a power surplus nation but the local inefficiencies of the state power supply boards prevent 24 hour availability. Privatisation of power and its promotion in all states is to be driven with great priority.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Prasad » 11 Jun 2019 11:51

Here's one such report. Blames upcoming BS-VI implementation for reduction in sales.
https://www.thehindubusinessline.com/ec ... 766355.ece

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Prasad » 11 Jun 2019 11:52

Can you guys parse what Arvind Subramaniam is saying about GDP calculations here? https://twitter.com/arvindsubraman/stat ... 8605009920

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby hanumadu » 11 Jun 2019 13:05

Do other countries face such issues with GDP estimation or is it just us? We seem to perennially be stuck in a debate about our GDP growth and the methodology to estimate it. So we spend years in changing our GDP methodology ostensibly to conform to the international standard, but we end up creating an even more broken system?

Assuming AS is right, even if we begin creating a new methodology, it will take at least 2 or 3 years before it is finalised and until then we have to depend on faulty indicators to frame out policy.

But isn't the new methodology developed in consultation with international experts (World Bank, IMF)?

From his tweet
Evidence 1. Growth correlations between 17 simple, macro-ish, & "independently produced" indicators and GDP break down post-2011. Pre-2011, 16 positively correlated with GDP; post-2011, 11 negatively correlated. 4/n


So out of the seventeen indicators, 6 did positively correlate to growth

Image


Please note that his study is not a direct measurement of GDP. He is comparing the effect of (some of?) these 17 Indicators on other countries' (71 high and middle income countries) GDP growth and estimates what effect they should have on India. Obviously, his estimates show that GDP growth should be lower for the given growth in those indicators in India.

https://indianexpress.com/article/opinion/columns/indias-gdp-growth-new-evidence-for-fresh-beginnings-5774138/

Second, I compare India with other countries. For a sample of 71 high and middle income countries, I estimate a relationship between a set of indicators and GDP growth for the pre and post-2011 periods. The indicators chosen (credit, exports, imports and electricity) are simple, reliable, and typically not produced by the agency that estimates GDP. This relationship is captured by the upward-sloping line in Figure 2. The line shows the growth predicted by the indicators (horizontal axis) and what is officially reported (vertical axis).

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Prasad » 11 Jun 2019 13:18

Prasad wrote:Here's one such report. Blames upcoming BS-VI implementation for reduction in sales.
https://www.thehindubusinessline.com/ec ... 766355.ece

https://www.bloombergquint.com/business ... down-26-pc
3 steady deepening drops in sales from March.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby hanumadu » 11 Jun 2019 13:27

Growth of those indicators from 2001 to 2011 and 2012 to 2017
Image

So from 2012 to 2017, some of the indicators that did not grow as much or had very small growth or even negative growth

Railway Freight, Commercial Vehicle, Import, Export had very small growth but we already knew this.

Cement, Steel, Credit, 2 wheeler had reasonable growth but not as much as from 2001 to 2012.

It would have been useful if he divided the periods into 2001-12, 12-14 and 14-17.
Or better yet, if he gave these graphs for each year between 2001-17.
Where are the services in all this, our highest contributor to GDP?

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Austin » 11 Jun 2019 16:21

India likely to join China-Russia call for new trading system on SCO sidelines

https://economictimes.indiatimes.com/ne ... 719295.cms

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A_Gupta » 11 Jun 2019 18:13

Re: the GDP debate, look at the "Index of Eight Core Industries (Base: 2011-12=100)": Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement, Electricity. I assume that the measures of these items are pretty good.

Going from index 100 to index 135 in 7 years is a compounded annual growth rate of 4.4%. IMO, the economy grows a few percent faster these core industries.

The index: (note: reverse-chronological order)

Code: Select all

2019 Apr   127.5
2019 Mar   145.2 (was 145.0)
2019 Feb   125.9
2019 Jan   134.5
2018 Dec   131.5
2018 Nov   128.3
2018 Oct   134.8
2018 Sep   127.2
2018 Aug   128.8
2018 Jul   129.2
2018 Jun   131.2
2018 May   131.9
2018 Apr   124.3
2018 Mar   138.5
2018 Feb   123.2

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby hanumadu » 11 Jun 2019 20:00

Rahul M wrote:NPAs falling faster than RBI's estimate: Crisil
Mumbai: The system-wide non-performing assets stock has declined massively to 9.3 percent in March 2019, much faster than the Reserve Bank's estimate and steeply down from 11.5 percent the year before, says a report.


Net NPAs should be closer to 4% by now. Perhaps the banks can resume normal lending now?

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby hanumadu » 11 Jun 2019 20:02

A_Gupta wrote:Re: the GDP debate, look at the "Index of Eight Core Industries (Base: 2011-12=100)": Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement, Electricity. I assume that the measures of these items are pretty good.

Going from index 100 to index 135 in 7 years is a compounded annual growth rate of 4.4%. IMO, the economy grows a few percent faster these core industries.

The index: (note: reverse-chronological order)

Code: Select all

2019 Apr   127.5
2019 Mar   145.2 (was 145.0)
2019 Feb   125.9
2019 Jan   134.5
2018 Dec   131.5
2018 Nov   128.3
2018 Oct   134.8
2018 Sep   127.2
2018 Aug   128.8
2018 Jul   129.2
2018 Jun   131.2
2018 May   131.9
2018 Apr   124.3
2018 Mar   138.5
2018 Feb   123.2


Even AS's own data shows a healthy growth for cement, petrol, electricity and steel.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A_Gupta » 11 Jun 2019 20:26

Let's understand some data points, e.g. commercial vehicle sales. Where is the data for 2001-2005 available? I can find post-2005 easily, e.g., https://www.statista.com/statistics/265 ... -in-india/

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 11 Jun 2019 22:33

Car sales growth tends to stall when urban areas have saturated roads. Higher investment in urban road development tends to foreshadow a phase in greater car sales. Correspondingly, medium/heavy CV sales tend to follow a phase of high intercity road building (though the primary driver right now is the combination of a growing investment cycle and GST removing many prior roadblocks - literally). This is something that's happening now in the CV sector - annual sales have broken out of the 5 year long funk when it was in the 600-700K territory, and have now exceeded 1M units/year.

It would be a very good data hunting exercise to correlate various core sector and transportation statistics to GDP measures. Example data includes:
Core sector: steel, cement, coal, electricity
Transport index: LCV sales, M/H CV sales, car sales
Indices: IIP, trade volume growth
Financial metrics: Overall credit growth, %NPAs, RE loan growth, consumer lending

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A_Gupta » 11 Jun 2019 23:35

Commercial vehicle domestic sales:
1995-96: 200,038 [3]
1996-97: 221,676 [3]
1997-98: 143,814 [3]
1998-99: 129,822 [3]
1999-00: 161,407 [3]
2000-01: 136,673 [3]
2001-02: 146,671 [3] 2001-02: 132,250 [1]
2002-03: 190,682 [4] 2002-03: 191,201 [3]
2003-04: 260,114 [4]
2004-05: 307,862 [4]
2005-06: 351,041 [4]
2006-07: 467,765 [4]
2007-08: 490,494 [5] 2007-08: 486,817 [4]
2008-09: 384,194 [5]
2009-10: 532,721 [5]
2010-11: 684,905 [5]
2011-12: 809,532 [5]
2012-13: 793,211 [6]
2013-14: 632,851 [2]
2014-15: 614,948 [2]
2015-16: 685,704 [2]
2016-17: 714,082 [2]
2017-18: 856,916 [2]
2018-19: 1,007,319 [2] #Only August 2018 -March 2019 data is available for 2018-19

[1] http://timesofindia.indiatimes.com/articleshow/6998761.cms
[2] http://siamindia.com/statistics.aspx?mpgid=8&pgidtrail=14
[3] https://web.archive.org/web/20030523232047/http://siamindia.com/
[4] https://web.archive.org/web/20080510074242/http://www.siamindia.com/scripts/domestic-sales-trend.aspx
[5] https://web.archive.org/web/20130806111949/http://www.siamindia.com/scripts/domestic-sales-trend.aspx
[6] https://web.archive.org/web/20180816233819/http://www.siamindia.com/statistics.aspx?mpgid=8&pgidtrail=14

PS: So now we can address the "Comm Vhcl" in the chart. Per the chart, the ranges compared are 2001-11 and 2012-17.
In 2001 CV sales were recovering after dipping from a peak of 221K in 1996 to 136K in 2000 and 2012 at 793K was just dipping off the peak of 809K in 2011. So the early ratio is higher than the long term trend and the later ratio is lower. So "Comm Vhcl", which as Suraj has already pointed out, has little correlation to GDP growth, falls way on the lower right of the chart.
Image
Last edited by A_Gupta on 12 Jun 2019 01:23, edited 7 times in total.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby rhytha » 11 Jun 2019 23:48


Suraj
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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 12 Jun 2019 00:00

Overall auto sales for FY17 and FY18 here:
Car, 2wheeler and CV data for FYs 2016-17 and 2017-18
And 2018-19
And older data 2009-2011
I also found data up to 2011-12:
2009-10: 532000
2010-11: 676000
2011-12: 809499
2012-13: 793211
2013-14: 632851
2014-15: 614948
2015-16: 685704
2016-17: 714232
2017-18: 856453
2018-19: 1007319

I think it's fairly obvious that there's not much correlation between CV sales and growth. However, it may correlate better with some subindices, e.g. rail freight traffic growth and coal production growth are closely correlated.

However, data since late 2016 probably has a significant divergence, due to the impact of GST on interstate commerce, correlating to a massive increase in CV sales in the past two fiscals, overtaking the previous peak in 2011-12 after which the industry collapsed during the economic stagnation of UPA-2 and it took half a decade to rebuild the economic cycle.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Ananth » 12 Jun 2019 00:25

MOSPI's response to Arvind Subramanian's article.

http://pib.nic.in/newsite/PrintRelease. ... lid=190365

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A_Gupta » 12 Jun 2019 01:28

I can put it like this:
From 1998-99 to present, commercial vehicle sales grew 7.8 fold.
But from 1996-97 to present, commercial vehicle sales grew only 4.5 fold!

Start wringing your hands about the growth rate.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A_Gupta » 12 Jun 2019 02:04

Here is the Index of Industrial Production, the three series, including overlap years. How each series is normalized onto the next and how that affects Arvind Subramaniam's analysis is beyond me.

Code: Select all

IIP Growth over Previous Year                       
        1993-94 2004-05 2011-12
         series  series  series
1994-95   9.1               
1995-96  13.0               
1996-97   6.1               
1997-98   6.7               
1998-99   4.1               
1999-00   6.7               
2000-01   5.0               
2001-02   2.7               
2002-03   5.7               
2003-04   7.0               
2004-05   8.4               
2005-06   8.0    8.6       
2006-07  11.9   12.9       
2007-08   8.7   15.5       
2008-09   3.2    2.5       
2009-10  10.5    5.3       
2010-11   7.8    8.2       
2011-12          2.9       
2012-13          1.1     3.3
2013-14         -0.1     3.3
2014-15          2.8     4.0
2015-16          2.4     3.3
2016-17          0.7     4.6
2017-18                  4.4
2018-19                  3.6

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Austin » 12 Jun 2019 09:26

Why You Should Not Underestimate The Severity Of The Coming Recession

How true is this and How can we maximise to our benefit if Recession occurs ?

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby yensoy » 12 Jun 2019 09:32

So if GDP growth has been overestimated, is it also the case that GDP has been overestimated? If GDP growth was off by 2.5% over 4 years, then our actual GDP should also be about 10% less than the numbers say.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A_Gupta » 12 Jun 2019 10:12

^^^ and e.g., household debt to GDP, Gross Capital Formation to GDP etc., are all underestimated by about 10%.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A_Gupta » 12 Jun 2019 17:55

Initial April IIP, revisions for March and January.
April 2019 IIP = 126.8 (preliminary)
April 2018 IIP = 122.6
{Wiki} The level of the Index of Industrial Production (IIP) is an abstract number, the magnitude of which represents the status of production in the industrial sector for a given period of time as compared to a reference period of time.

Data source: mospi.gov.in (Ministry of Statistics and Program Implementation).
http://pib.nic.in/PressReleseDetail.aspx?PRID=1574033
Index of Industrial Production - IIP - 2011-12 series, with 2011-12 normalized to 100 at the monthly level.
The data is in reverse chronological order.

Code: Select all

2019 Apr   126.8
2019 Mar   140.8 (was 140.2)
2019 Feb   127.5
2019 Jan   134.4 (was 134.2)
2018 Dec   133.9
2018 Nov   126.1
2018 Oct   132.8
2018 Sep   128.8
2018 Aug   128.0
2018 Jul   125.7
2018 Jun   127.7
2018 May   129.6
2018 Apr   122.6
2018 Mar   140.3
2018 Feb   127.4

Notes:
Mar 2019 index has undergone first revision.
Jan 2019 index has undergone final revision.
Quick estimate of May 2019 will be available Jul 12, 2019.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A_Gupta » 12 Jun 2019 17:59

http://pib.nic.in/PressReleseDetail.aspx?PRID=1574000

Economic Advisory Council to look into estimates made in Dr. Arvind Subramanian’s paper
Posted On: 12 JUN 2019 3:42PM by PIB Delhi

The former Chief Economic Adviser (CEA), Dr. Arvind Subramanian, has published a paper “India’s GDP Mis-estimation: Likelihood, Magnitudes, Mechanisms, and Implications” in June, 2019, on the basis of which he has also published an article in Indian media, making strong claims about India’s real GDP figures between 2011-12 and 2016-17. It is worth noting that the Base Year of India’s income calculations shifted to 2011-12 on the basis of recommendations of several committees with experts in National Income Accounting. It was on the basis of these recommendations, started in 2008, that the Government implemented the change from January, 2015. Therefore, it is wrong to suggest that the views of experts have not been taken into account while changing the Base Year or weights or switching from Annual Survey of Industries (ASI) to Ministry of Corporate Affairs (MCA) 21. In his paper, Dr. Subramanian has used cross-country regressions to estimate what India’s GDP should be. Using cross-country regressions to estimate GDP is a most unusual exercise, as is the suggestion that any country’s GDP that is off the regression line must be questioned. The proxy indicators that he used can also be questioned. Nor does this exercise allow for GDP increases on the basis of productivity gains. A country’s GDP is in nominal terms and any exercise should be on the basis of nominal figures, not real growth rates. The Economic Advisory Council will examine in detail the estimates made in Dr. Arvind Subramanian’s paper and come out with a point-to-point rebuttal in due course. At the moment, it is felt that any attempt to sensationalize what should be a proper academic debate is not desirable from the point of view of preserving the independence and quality of India’s statistical systems, all of which the former CEA is familiar with. These are certainly issues that Dr. Subramanian must certainly have raised while he was working as CEA, though by his own admission, he has taken time to understand India’s growth numbers and is still unsure.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A_Gupta » 12 Jun 2019 18:08

http://mospi.gov.in/sites/default/files ... 7-18_0.pdf

Capital Formation

13.Gross Capital Formation (GCF) at the current as well as the constant prices is estimated by two approaches :–(i) through flow of funds, derived as Gross Saving plus net capital inflow from Rest of the World (ROW); and (ii) by the commodity flow approach, derived by the type of assets. The estimates of GCF through the flow of funds approach are treated as the firmer estimates. GCF by industry of use and by institutional sectors does not include "valuables‟and therefore,these estimates are lower than the estimates available from commodity flow approach.

14. GCF at current prices is estimated at Rs. 55.27 lakh crore for 2017-18 compared to Rs. 47.41 lakh crore during 2016-17. The rate of GCF to GDP increased from 30.9 per cent during 2016-17 to 32.3 per cent in the 2017-18. The rate of GCF (excluding valuables) to GDP stands at 29.8 per cent and 31.1 per cent for 2016-17 and 2017-18 respectively. The rate of capital formation in 2011-12 to 2017-18 has been higher than the rate of saving because of positive net capital inflow from ROW.


17.The rate of GCF to GDP at constant (2011-12) prices has increased from 33.7 per cent in 2016-17 to 35.5 per cent in 2017-18.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A_Gupta » 12 Jun 2019 23:16

Good old Jaggi:
https://swarajyamag.com/economy/ex-cea- ... licy-wonks
Ex-CEA Arvind Subramanian Has Junked Not Only GDP Data, But Also Monetary And Fiscal Policy Wonks
Which brings us to question four: is Subramanian merely saying that we need to go back to the old method of GDP calculation based on volumes, or is he saying that we need to correct the new series with better data on the values used to estimate sectoral contributions to GVA?

Former chief statistician Pronab Sen told The Hindu that since the two GDP measurement methodologies were different, the estimates would also be different. He told the newspaper: “In estimating the growth of the high-frequency indicators pre-2011, he (Subramanian) has in a sense replicated the method in which the GDP growth was calculated during that period, and then said that there is a correlation between these indicators and GDP growth. Post 2011, when we moved to value indicators from volume indicators, the relationship is weaker because the other two drivers would start getting picked up by the values.”

One conclusion we should draw from this discrepancy is simple: whenever a new series is introduced (whether in GDP, CPI or IIP), the old series must not be discontinued till users and researchers accept the new series as a better substitute. Those who are more comfortable with the old series, can continue to use them.

Question five: why ignore the possibility of productivity gains? The average gap of 2.5 per cent between the new GDP series and Subramanian’s estimates cannot be taken as the real gap for one simple reason: it ignores the possibility of higher value growth resulting from productivity, or quality improvements, even without an increase in volumes.

For example, if car buying has levelled off, it could be because of the rise of Ola and Uber, and also higher usage of public transport. The entry of Jio in mobile telephony may have boosted data volumes even without an increase in the actual number of subscribers. And if corporates are deleveraging, what is the chance that they will not flog their existing assets harder to generate more output from the same investment? Upto a point, you can actually have growth without additional investment is spare capacity exists. And spare capacity and credit binge was what UPA-I’s boom-boom years created.

Productivity gains in the software services industry have also doubled between 2009-10 and 2015-16, and continues to go up even now. If it took around 32,000 engineers to generate $1 bn worth of exports in 2009-10, it now takes less than half those numbers to generate the same incomes, says a NASSCOM study. After the introduction of the goods and services tax, truck-owners have reported a near halving of turnaround time. This means demand for new trucks can be weak in the short term.

But the biggest problem with Subramanian’s new GDP estimates is this: if real GDP growth was really substantially lower, and if we assume that our consumer price indices were not totally wrong, then we have got both fiscal and monetary policies absolutely wrong.

A sharply lower GDP means our actual fiscal deficits throughout the 2011-17 period were much higher, and we should have had a stronger fiscal consolidation roadmap. And if growth was really that much lower, our monetary policy was simply way out of whack and interest rates too high, especially after 2014.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 12 Jun 2019 23:19

Arvind Subramaniam's argument is primarily a question of lack of correlation between a collection of other macroeconomic parameters. He focuses primarily on the accuracy of the 2011-12 data series, his contention being that the previous 2004-05 was more accurate. He then presents a correlation mechanism to estimate growth during the period since 2011.

Scanning over his statistics, he avoids correlating one major parameter - tax collections. He argues that this is because of changes in tax collection figures prior to and after 2011. However, this argument is not a credible one. Further, I collected data for three financial parameters (not unit totals like CV sales) - total tax revenue collections, total trade volume in rupees, total non farm credit in rupees. All data from RBI's Handbook of Statistics on Indian Economy.

The correlation coefficient between YoY growth rates of these parameters and GDP between 2000-01 and 2017-18 are:

Code: Select all

Relationship CorCoeff
Tax-GDP           0.64
TradeVol-GDP      0.53
NonFarmCredit-GDP 0.37

Tax growth is fairly well correlated, trade less so, and non farm credit, not really. Digging further by separating correlation coefficients up to 2011-12 and since then:

Code: Select all

Relationship Upto2012 Since2012
Tax-GDP           0.68 0.21
TradeVol-GDP      0.65 0.15
NonFarmCredit-GDP 0.16 0.93

Now the relationship changes a lot - what used to correlate well (tax vs GDP and trade vol vs GDP) no longer does with new series data, while what didn't correlate well (non farm credit) does.

To smooth things out, I compared a different set of figures - not YoY but year on three years prior. This 'smoothes' out YoY data. When I do this and compute correlation coefficient between the corresponding Yo3Y figures:

Code: Select all

Relationship Upto2012 Since2012
Tax-GDP           0.42 0.73
TradeVol-GDP      0.39 0.63
NonFarmCredit-GDP 0.18 0.99

Voila - with YoY discrepancies smoothened out, we find that the new GDP series (Since 2012) actually correlates very well with actual financial figures for tax revenue collection, trade volume and non farm credit, all of which are actual figures and not either unit counts (whose per unit value could change) or indices like IIP.

In my opinion, statistics can be interpreted various ways, and attempting to define correlation using noisy YoY data is as best an exercise in guesstimation. When correlating current series GDP data against 3-year growth figures for taxes, trade volume or non farm credit (all denominated in Rupees) against GDP (also in Rupees), the correlation is actually pretty good.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby ArjunPandit » 13 Jun 2019 00:14

^^havent gotten to the details and probably wont have time but basing any macro econ analysis merely on pairwise correlation ignores structural drivers. US had a jobless growth and even after last recession the unemployment and interest rates which were key metrics became completely useless for a correlation analysis. The fundamental problem is that people havent focussed on macro data quality in india. a lot can be tweaked with minor changes in data, i see that all day...reports drive change in the cuts etc..as long as MCA21 is a black box and it includes shell companies and economy is not brought into structured cycle these things will remain at a very basic and fundamental level.
this is where reforing PF data and Jan Dhan a/cs is a must.
If GoI works towards a mandatory adhar-bank a/c-pan seeding going forward and makes cash less and less available rest all things will fall in place and it will be much easier to do.
PS: After last recession, change in unemployment or change in the change in unemployment captured more importance.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby A_Gupta » 13 Jun 2019 02:00

Suraj wrote:Digging further by separating correlation coefficients up to 2011-12 and since then:

Code: Select all

Relationship Upto2012 Since2012
Tax-GDP           0.68 0.21
TradeVol-GDP      0.65 0.15
NonFarmCredit-GDP 0.16 0.93

Now the relationship changes a lot - what used to correlate well (tax vs GDP and trade vol vs GDP) no longer does with new series data, while what didn't correlate well (non farm credit) does.


But the correlations remain positive. What I don't understand is "For the period pre-2011, 16 of the 17 indicators are positively correlated with the GDP growth. Post-2011, 11 of the same 17 indicators are negatively correlated with the GDP growth,..." (e.g., Tushar Gupta, in Swarajya, https://swarajyamag.com/economy/explain ... plications )

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 13 Jun 2019 02:38

Given that hard money parameters (tax collections, trade volume and credit growth) all remain well correlated with the new series data when accounting for YoY noise, I'm not a big believer in Arvind Subramaniam's extrapolated GDP numbers.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 13 Jun 2019 04:09

Growth rises, prices steady: April factory production rises to 3.4%, May CPI inflation at 3.05%
A rise in vegetables, as well as food prices, pushed up retail inflation rate further to 3.05 per cent in May, according to government data released on Wednesday. This is the fourth month of rise in the rate. Retail inflation rose in the last month, mainly due to spike in food prices, the data released by the Central Statistics Office (CSO) said. The CPI-based inflation in April was revised marginally upwards to 2.99 per cent from the earlier estimate of 2.92 per cent, the data showed.

Industrial production grew at a six-month high of 3.4 per cent in April mainly, owing to an improvement in mining and power generation. The IIP had expanded by 4.5 per cent in April 2018. The Index of Industrial Production (IIP) had contracted by 0.1 per cent in the previous month.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby JayS » 13 Jun 2019 11:03

Consistent double digit growth in first three quarters and Q4 showed 8-9% growth in Earnings reported by listed companies.

https://www.moneycontrol.com/news/busin ... 92521.html

Earnings growth is expected to pick up and get back into double digits in coming FY again.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Singha » 13 Jun 2019 13:44

lots of shadow boxing in MSM about "crisis in economy" based off the ex CEA report and car sales growth curve.

Govt is also spreading panic with some aggressive goals on EV. when rich countries are ready to transfer battery tech at very cheap rates and guarantee the raw materials for MII batteries, then we should make big move on EV. else why bother? we are close to sources of oil and our per capita pollution and energy use is nothing compared to G8. why hang a millstone around our necks trying to get shabashi from those who speak with forked tongues.

right now no apt or office in india is rigged with meters in each parking lot to dole our charges. it will need a lot of changes and a lot of cheap electric grid power to make EVs widely usable. until then ,elites can play around with Ather scooters.

we need to make the minimum international commitments on international front until we grow rich hopefully by 2050. then we can earn shabashi by going above and beyond. without the raw materials what does Modi hope to achieve with EV push other than importing batteries from all over.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Prasad » 13 Jun 2019 14:12

Should perhaps move to another thread but here's the thing. Porsche, Toyota, Panasonic, Honda, Suzuki all will move to EVs. Our engine tech is laughable. Most of our car engines' tech comes from abroad. EU cos are already planning to phase out diesel engines for cars and once EVs become mainstream, they'll tax the crap out of petrol ones too. We will be riding petrol cars that pollute our cities with no tech inflow to make better engines either.

Our electricity demand is set to grow and coal will still be 50%+ of it. But renewables will go up drastically. They've already grown dramatically in the last 5-6 years. Charging infra can be built up quicker than battery manufacturing and recycling. That is the tech that we need. As with sources for all the minerals needed for making the batteries. We already import somewhere close to 1 Gwhr in cells each year. We have labscale management systems that are on par or better than chinese ones. With enough govt push, we can become a manufacturer too. Except, given how dynamic our govts are, we might end up missing the bus. ARCI does battery work for toyota btw. So we're not dunderheads there. Just that this is all mucho dinero business and without govt support our auto makers wont do $hit.

And lets face it, our cities are getting increasingly polluted. Our orr office front is enough example :) So in fact, i'd accept that the govt has better sense if they push fleet EVs and buses for city transport corporations with larger subsidies than cars and in between for 2 wheelers. We do not need more cars. This is a golden opportunity to add numbers to our city transport fleets and reduce vehicular population!

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby hanumadu » 13 Jun 2019 16:40

Singha wrote:lots of shadow boxing in MSM about "crisis in economy" based off the ex CEA report and car sales growth curve.

Govt is also spreading panic with some aggressive goals on EV. when rich countries are ready to transfer battery tech at very cheap rates and guarantee the raw materials for MII batteries, then we should make big move on EV. else why bother? we are close to sources of oil and our per capita pollution and energy use is nothing compared to G8. why hang a millstone around our necks trying to get shabashi from those who speak with forked tongues.

right now no apt or office in india is rigged with meters in each parking lot to dole our charges. it will need a lot of changes and a lot of cheap electric grid power to make EVs widely usable. until then ,elites can play around with Ather scooters.

we need to make the minimum international commitments on international front until we grow rich hopefully by 2050. then we can earn shabashi by going above and beyond. without the raw materials what does Modi hope to achieve with EV push other than importing batteries from all over.


With the amount of sunshine in our country, EVs should be the automatic choice. We can develop battery tech, but we cannot develop oil resources. I see a lot of demand for cars in India once EVs' cost becomes comparable to diesel or petrol cars. Buy a solar panel and both your electricity and transportation charges are taken care of.

Adopting EVs has many advantages,
1. Reduces oil imports
2. Reduces pressure on rupee
3. Brings down oil prices
4. Less money for islamic terrorism

Worst case, we are importing oil now, we will import batteries. At least batteries can be made in India. Oil can't be.

Modi has always been aggressive with his goals and achieved them most of the times. He is also practical enough not to shoot the economy in the foot in pursuit of some lofty ideal. For now, I will trust him to know what he is doing.

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Re: Indian Economy News & Discussion - Nov 27 2017

Postby Karthik S » 13 Jun 2019 16:56

Not sure how much solar power can be helpful. It's least efficient source. It may be used to run electricals in a vehicle, but to power one is another matter.


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