Indian Economy News & Discussion - Nov 27 2017

[A_Gupta]

What I hear is a slow down in consumer spending; complaints of declining sales from the FMCG (Fast Moving Consumer Goods) companies.

[Vayutuvan]

^ Anecdotal?!

[Suraj]

I've already posted about how UPI data showed a slowdown in Q2 but how it's since accelerated in Q3 due to the extremely strong performance in October:
Update on UPI statistics from Oct 2024
November is decidedly slower than October which benefited from all the festival spending being compressed into it and not spread between Oct+Nov this year. But Q3 will likely be much stronger.

I also track PMI data - services, mfg and composite - and they don't show much of a signal of slowdown.

As I posted in the review of the GDP data, PFCE data does NOT show a drop. In fact PFCE grew more YoY than GDP did, so the drop in the latter came from other sources as I mentioned earlier.

[A_Gupta]

Is inequality increasing in India? To tax India’s super-rich or not? Thomas Piketty versus Indian govt economists
https://www.youtube.com/watch?v=zLEVINLmE0M

I recommend the above seminar for several reasons, including

a. It tells you how standards of living are getting better for Indians.

b. Various independent arguments show that inequality is decreasing.

c. Very important to me, where in my experience Indians used to mouth the usual European or American economic orthodoxy, now they are thinking for themselves and are evidence- and data-driven -- and are not in the periphery but are in the positions of influence in India. As long as the current dispensation remains, India will not shackle itself to western economic orthodoxy, but will find its own way.

[chetak]

Minhaz Merchant@MinhazMerchant

FM Chidambaram & RBI guv RRR had nearly destroyed Indian banking by 2014 with humongous NPAs following “phone banking” loans given to cronies in UPA1 & UPA2. It’s taken years to restore Indian banks to good health today.

@RahulGandhi⁩ knows this but persists in lying in LS.

[chetak]

Is inequality increasing in India? To tax India’s super-rich or not? Thomas Piketty versus Indian govt economists
https://www.youtube.com/watch?v=zLEVINLmE0M

I recommend the above seminar for several reasons, including

a. It tells you how standards of living are getting better for Indians.

b. Various independent arguments show that inequality is decreasing.

c. Very important to me, where in my experience Indians used to mouth the usual European or American economic orthodoxy, now they are thinking for themselves and are evidence- and data-driven -- and are not in the periphery but are in the positions of influence in India. As long as the current dispensation remains, India will not shackle itself to western economic orthodoxy, but will find its own way.

A_Gupta ji,


Its difficult to agree with this cheese eating fellow's ideas.


taxing an Indian billionaire is taxing India and billionaires in other countries like India which is what all the goras want, no matter how innocuously piketty dresses it up. They simply don't want to pay for what they have done and the damage that they have caused over the past many tens of decades, starting from the industrial revolution


It is the goras who are historically and also currently responsible for the bulk of the pollution. Let them pay

[A_Gupta]

A better link is this - it includes the time from hours 1:30 to 2:30 which has the questions and answer session, in which the Indian economists really take Piketty to task for having unworkable ideas. If you have watched the first video to the end, start this one from about 1:30 for the Q&A.

This is also a master class in how to disagree agreeably.

https://www.youtube.com/watch?v=E4asEEe5mVI

[A_Gupta]

@Chetak,
You will enjoy the Q&A of the seminar.

[drnayar]

https://indianexpress.com/article/busin ... p-9542291/

“The saturation in Bangladesh began some time ago, but orders had not been moving to India. Most of them are going to Cambodia, Vietnam, and Indonesia. India has a lot of opportunities, but our product mix is not changing, and the benefits are not arriving,” the executive said on condition of anonymity.

[A_Gupta]

e.g, this: Financial Express, October 23, 2024:
Shrinking middle class hitting FMCG firms: Nestle India
https://www.financialexpress.com/busine ... %20Tuesday.

[uddu]

e.g, this: Financial Express, October 23, 2024:
Shrinking middle class hitting FMCG firms: Nestle India
https://www.financialexpress.com/busine ... %20Tuesday.

Old legacy companies are facing tough competion from new players and people are more health concious compared to the older times. Younger generation is also very concious in avoiding sugary content. One young chap even shocked me and told me Coke is for toilet cleaning when it was offered to him.

[drnayar]

India – Resurgence of the Golden Bird

[A_Gupta]

Gautam Singhania of Raymond says that while Trump will do some damage to India, he will do a lot more damage to China, and that will improve India's competitive situation.

He also says that while the cost to the importer of textiles/garments is a bit more in India than in Bangladesh, now India is in a position because of vertical integration to cut 10-15 days off in the delivery time, and that makes up for the extra cost. Further he says, once the supply chain has shifted to India, Bangladesh will find it very difficult to shift back.

https://youtu.be/pX73g1Cz33I?si=RXjFqMstUFweyPU7

[Deans]

I blog on the Ukraine war and the feedback I often get when discussing it in forums is that India is siding with Russia, or financing Putin by buying Russian oil. My latest blog post looks at oil trade data and argues that India's actions are in the best interest of all oil importers. There are more egregious instances of sanctions busting and better ways to reduce Russia's energy export revenues without harming importers.

https://rpdeans.blogspot.com/2024/12/in ... ality.html

For those who haven't read my blog - I blog on Indian national security, current wars and startups, with original data based analysis.
My blog is free and non commercial. I am retired and independent. I write to educate myself on subjects of interest to me and not covered
adequately in the mainstream media and generate a fact based discussion in the process.

[Cyrano]

Thanks Deans ji.

If the economics of this oil trade are as you describe (I think you are indeed quite right) then how did our oil companies make some windfall profits and the GoI was taxing them separately until very recently?!

Is there a possibility that all the numbers are not in public domain?

The fact that India continued to buy Russian oil despite immense pressure by NATO countries has made it possible for many smaller countries to do the same and thus de-legitimized the sanctions.

[VinodTK]

Microsoft’s Nadella Pledges $3 Billion India AI Investment

Microsoft Corp. plans to spend $3 billion to expand its cloud computing and artificial intelligence capabilities in India, targeting the world’s most populous country to fuel its revenue growth.

Chief Executive Officer Satya Nadella pledged the investment over two years on Tuesday at an event in Bangalore, southern India, addressing a crowd of startup founders and executives from tech firms such as Wipro Ltd. and Cognizant Technology Solutions Corp.

The country of 1.4 billion people is emerging as an AI battlefront, with CEOs from Nvidia Corp.’s Jensen Huang to Advanced Micro Devices Inc.’s Lisa Su visiting in the past months. India, with millions of programmers and home to technology services providers such as Tata Consultancy Services Ltd. and Infosys Ltd., holds one of the world’s largest AI talent pools.

“The diffusion rate of AI in India is exciting,” Nadella said.

On Monday, Nadella posted a photo online from his meeting with India’s Prime Minister Narendra Modi. “Excited to build on our commitment to making India AI-first,” he said on X. The prime minister responded, saying he is “glad to know about Microsoft’s ambitious expansion and investment plans in India.”


Under Nadella’s stewardship, Redmond, Washington-based Microsoft has been driving to commercialize AI. Last week, the company announced plans to invest $80 billion in building data centers, which provide critical infrastructure for businesses to deploy AI systems and tools.

The tech giant has already made major investments in India — Nadella’s native country — employing more than 23,000 people in cities including the technology hubs of Bangalore and Hyderabad. The CEO said Tuesday Microsoft is committed to giving AI training to 10 million people in the country by 2030.

[A_Gupta]

The Gross State Domestic Product of Uttar Pradesh is about INR 25 lakh crores in 2024. It needs to more than triple for the UP to become a USD 1 trillion economy. Does anyone have growth projections for the state?

[JTull]

The Gross State Domestic Product of Uttar Pradesh is about INR 25 lakh crores in 2024. It needs to more than triple for the UP to become a USD 1 trillion economy. Does anyone have growth projections for the state?

https://www.ibef.org/states/uttar-pradesh-presentation
https://invest.up.gov.in/

[A_Gupta]

Thanks, @JTull!

The first page says:

The state government also passed Uttar Pradesh Startup Policy, 2020. The objective of the policy is to be among the top-3 states in Start Up ranking, establish/support minimum of one incubator in each district of the state, and create an ecosystem for at least 10,000 startups in the state.

The second page says:

13370+ Startups are recognized by DPIIT

https://timesofindia.indiatimes.com/cit ... 199340.cms#

UP has emerged as the top state in implementation of the Amrit Sarovar project, having completed 80% of its target.

[JTull]

An interesting number that I've started tracking is the monthly amount being invested in MFs through the SIP route

Dec '24: ₹ 26,459 crore
Nov '24: ₹ 25,320 crore
Oct '24: ₹ 25,323 crore
Sep '24: ₹ 24,509 crore
Aug '24: ₹ 23,547 crore
Jul '24: ₹ 23,332 crore
Jun '24: ₹ 21,262 crore
May '24: ₹ 20,904 crore
Apr '24: ₹ 20,371 crore
Mar '24: ₹ 19,271 crore
Feb '24: ₹ 19,187 crore
Jan '24: ₹ 18,838 crore

Dec '23: ₹ 17,610 crore
Dec '22: ₹ 13,573 crore
Dec '21: ₹ 11,305 crore
Dec '20: ₹ 8,418 crore
Dec '19: ₹ 8,518 crore
Dec '18: ₹ 8,022 crore
Dec '17: ₹ 6,222 crore
Dec '16: ₹ 3,973 crore

[JTull]

The State Of India's States: Here Are The Prime Movers, The Steady Climbers, And The Economic Laggards

[drnayar]

https://youtube.com/shorts/TNQIBxtYMhc? ... 867x2xNpyb

Jensen Huang on Modiji's vision 6 years before the AI hype !!

[drnayar]

How the caste system "froze" genetics in India and prevent collapse as in Europe

https://youtube.com/shorts/Z4Q5Qh2Tx5c? ... -Rz_S_RSQu

[Tanaji]

https://indianexpress.com/article/expla ... plained_hp

The humble potato and growth in farming in India. For a change, an article that is actual substance…

[chetak]

@Chetak, You will enjoy the Q&A of the seminar.

Thank you for the heads up, A_Gupta ji.

Much appreciated.

[chetak]

NBFC/Shadow banking in India has gone too far.

RBI needs to pull the reins on this sector harder.

[Jay]

How the caste system "froze" genetics in India and prevent collapse as in Europe

https://youtube.com/shorts/Z4Q5Qh2Tx5c? ... -Rz_S_RSQu

What was the collapse he was talking about here? Just from the video, he seems to think that genetics' froze in India around 3000 years ago, where as in Europe genetics kept changing.

[williams]

How the caste system "froze" genetics in India and prevent collapse as in Europe

https://youtube.com/shorts/Z4Q5Qh2Tx5c? ... -Rz_S_RSQu

What was the collapse he was talking about here? Just from the video, he seems to think that genetics' froze in India around 3000 years ago, where as in Europe genetics kept changing.

Sorry what has this to do with Indian Economy? Most genetic sequencing studies is plain theoretical based on unreliable sampling and has not produced any meaningful results except for augmenting old western race baiting propaganda.

[vera_k]

Reading this makes me wonder why food is taxed at all. What would be the impact of eliminating GST on food items, raw or packaged?

Popcorn Is Taxed at Three Rates in India

[Lisa]

Luxury foods should be taxed. When poor people struggle with food in itself, it would be unconscionable if booze, pâté and that matter popcorn were not. In the UK you can buy a biscuit without GST but a chocolate coated one is taxed.

P.S. Popcorn is also taxed in the UK.

[drnayar]

Luxury foods should be taxed. When poor people struggle with food in itself, it is unconscionable that booze, pâté and that matter popcorn are not. In the UK you can buy a biscuit without GST but a chocolate coated one is taxed.

P.S. Popcorn is also taxed in the UK.

any processed food with more than a certain percentage of sugar should be taxed, as in UK..where in India is alcohol not taxed ?!!

[Lisa]

I have amended my note to more clearly convey by thoughts.

[tandav]

Gautam Singhania of Raymond says that while Trump will do some damage to India, he will do a lot more damage to China, and that will improve India's competitive situation.

He also says that while the cost to the importer of textiles/garments is a bit more in India than in Bangladesh, now India is in a position because of vertical integration to cut 10-15 days off in the delivery time, and that makes up for the extra cost. Further he says, once the supply chain has shifted to India, Bangladesh will find it very difficult to shift back.

https://youtu.be/pX73g1Cz33I?si=RXjFqMstUFweyPU7

Trump will do very little damage to China. China's manufacturing prowess in any sector is streets ahead of competition and no one has even begun to understand how far ahead the Chinese ecosystem is in every area of modern civilization from consumer products, civil engineering, food production, urban planning, computers, mobile phones, quantum computing, fusion energy you name it and there is a Chinese group of companies that commands 70% of the global manufacturing capacity. Apart from food and some amount of energy supplies that China has locked up from Russia they are essentially self sufficient. Japan emerged from the Meiji revolution as a massive modern economy and China has emerged from the cold war in 30 years due to the astute planning of the CPC as an even bigger and more efficient version. The country is running like an efficient corporate startup, able to take massive risks no democracy can take, make mistakes and correct those mistakes faster than most can comprehend, decisions at the top are scientific, data driven, relentless time bound, the people's culture work oriented and projects are outcome oriented.

[tandav]

https://indianexpress.com/article/busin ... p-9542291/

“The saturation in Bangladesh began some time ago, but orders had not been moving to India. Most of them are going to Cambodia, Vietnam, and Indonesia. India has a lot of opportunities, but our product mix is not changing, and the benefits are not arriving,” the executive said on condition of anonymity.

Try starting a factory in India, every letter/ registration / utility / consent needs you to offer supplication to the officer in charge, his minions and pan chewing doorman expects grease money. A simple approval can get delayed by years. Most officials have paid large amounts to the politicians to get such lucrative posts. All this grease is extracted from the public by delivering piss poor infrastructure in government contracts and obviously gets passed on to the customer as increased prices and inflation.

A local corporator /street thug in India told us openly that politically unconnected, professionals people were "note banks" to be milked to make money while throwing freebies from the tax payers to their slum vote banks. He had unleashed a completely shocking demolition notice on one of our legally owned stamp duty paid shop stating that some minor interior works done was illegal, while right next door hectare of illegal slums are vote banks under his protection.

[drnayar]

https://economictimes.indiatimes.com/ne ... s?from=mdr

China strikes with export curbs: India’s EV and solar boom faces supply chain chaos

[chetak]

[A_Gupta]

This was released on January 7th:
https://pib.gov.in/PressReleasePage.aspx?PRID=2090875

The National Statistics Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI) is releasing in this Press Note, the First Advance Estimates of Annual Gross Domestic Product (GDP) for the Financial Year (FY) 2024-25 along with its expenditure components both at Constant (2011-12) and Current Prices. Annual Estimates of Gross Value Added (GVA) at Basic Prices by kind of economic activity along with year-on-year percent changes, expenditure components of GDP and Annual estimates of Gross/Net National Income and Per Capita Income for the Financial Years 2022-23, 2023-24 and 2024-25 at Constant and Current Prices are given in Statements 1 to 4 of Annexure A.



Key Highlights:

• Real GDP has been estimated to grow by 6.4% in FY 2024-25 as compared to the growth rate of 8.2% in Provisional Estimate (PE) of GDP for FY 2023-24. Nominal GDP has witnessed a growth rate of 9.7% in FY 2024-25 over the growth rate of 9.6% in FY 2023-24.

• Real GVA has grown by 6.4% in FY 2024-25 over the growth rate of 7.2% in FY 2023-24. Nominal GVA has shown a growth rate of 9.3% in FY 2024-25 as compared to the growth rate of 8.5% in FY 2023-24.

• Real GVA of Agriculture and allied sector has been estimated to grow by 3.8% during 2024-25 as compared to the growth of 1.4% witnessed during the last year, i.e., 2023-24.

• Real GVA of ‘Construction’ sector and ‘Financial, Real Estate & Professional Services’ sector has been estimated to observe good growth rates of 8.6% and 7.3%, respectively during the FY 2024-25.

• Private Final Consumption Expenditure (PFCE) at Constant Prices, has witnessed a growth rate of 7.3% during FY 2024-25 over the growth rate of 4.0% in the previous Financial Year.

• Government Final Consumption Expenditure (GFCE) at Constant Prices, has rebounded to a growth rate of 4.1% as compared to the growth rate of 2.5% in the previous Financial Year.

I. Annual GDP Estimates and Growth Rates

Real GDP or GDP at Constant Prices is estimated to attain a level of ₹184.88 lakh crore in the financial year 2024-25, against the Provisional Estimate of GDP for the year 2023-24 of ₹173.82 lakh crore. The growth rate in Real GDP during 2024-25 is estimated at 6.4% as compared to 8.2% in 2023-24. Nominal GDP or GDP at Current Prices is estimated to attain a level of ₹324.11 lakh crore in the year 2024-25, against ₹295.36 lakh crore in 2023-24, showing a growth rate of 9.7%.

Real GVA is estimated at ₹168.91 lakh crore in the year 2024-25, against the PE for the year 2023-24 of ₹158.74 lakh crore, registering a growth rate of 6.4% as compared to 7.2% growth rate in 2023-24. Nominal GVA is estimated to attain a level of ₹292.64 lakh crore during FY 2024-25, against ₹267.62 lakh crore in 2023-24, showing a growth rate of 9.3%

[fanne]

Basically 3.9 trillion usd or so

[JTull]

Basically 3.9 trillion usd or so

Good ballpark!

Aggregate ₹ numbers aren't clearly stated whether they're at current prices or 2011-12 base prices used to calculate Real GDP growth rate. So, exchange rate also must be carefully used.

I'll refer you to World Bank data that estimated India's GDP at the end of 2023 at $3.57 trillion at current (2023) US$. You can apply 6.2% growth over this fiscal year and we could be looking at $3.8 trillion.

We will be catching up to Japan around Q3 of FY 2026-27, which is at $4.20 trillion but growing at 1.7%. And, Germany couple of quarters later.

[Suraj]

The official press release is a better source:
PRESS NOTE ON FIRST ADVANCE ESTIMATES OF GROSS DOMESTIC PRODUCT FOR 2024-25

GDP data is always reported 2 months after the end of the quarter - it has been so for decades. However, the first advance estimate (FAE) is a newer release made prior to the budget, that is done in January. This is the FAE.

* The GDP is 32,411,406 crore, which is $3.9 trillion .
* Estimated annual growth is 6.4% which may move up or down when the regular report is posted on May 28 (FY2024-25 ends on March 31).
* Statement 1 (Page 6) shows generally solid performance in major categories. A slight weakening in GFCF growth to 6.4% from 9% the prior year, but still 33.5% of GDP. Export growth is up, import growth is down.
* Statement 3 and Annexure B don't suggest a broadbased negative trend, though manufacturing is slower than the year prior, but other pointers like private vehicle sales, bank deposits and steel output all show double digit growth.

One of the main problems this year is that 'Discrepancies' is significantly higher - and the change in direction is significant (almost 2 points of GDP from +0.7 to -1.2) from last year. The discrepancies figure describes the difference between GDP calculated by consumption model (private consumption + investment + govt spending + exports - imports) and income model (wages + rent + interest + profit + taxes - subsidies) .

On paper there should be zero discrepancy but in reality, data collection and timing affect this.I suspect the discrepancy will go down later, sending GDP growth for this fiscal up with it, but there's no clarity as to what's causing it. The midpoint of the swing is almost $45 billion.

One potential area is over-invoicing of imports. Recently there was a major controversy that gold imports were being dramatically overcounted by more than twice actual imports. This was for just one month, but could be something spread over a much longer period. Lowering import growth further would boost the consumption model of GDP.

Generally, this report confuses me. There's no clear sense of where the slowdown is, and there's a possibility that data collection has broken down somewhere. I suspect GoI is busy trying to figure out where they're getting bogus data from, which would be the simplest explanation for why they've said nothing useful here.