Indian Economy: News and Discussion (Apr 1 2011)

ramana · Post by **ramana** » 28 Apr 2011 00:04

SureshP, Mark Tully, the BBC reporter, once wrote that people ignore the 15% factor which is the profit markup that the Indian businessman marks up and is quite satisfied with that and is busy selling goods than making them to a captive market. So all this rhona dhona of IPR etc is useless.

Theo_Fidel · Post by **Theo_Fidel** » 28 Apr 2011 00:45

The sarcasm is overwhelming but confusing. Is he saying the poverty decline is less or more. Or that we don't know.

Theo_Fidel · Post by **Theo_Fidel** » 28 Apr 2011 00:45

repeat

putnanja · Post by **putnanja** » 28 Apr 2011 01:03

Theo_Fidel wrote:The sarcasm is overwhelming but confusing. Is he saying the poverty decline is less or more. Or that we don't know.

He is basically attacking the NSSO for their shoddy job, saying that the percentage reduction in poverty has remained the same as per NSSO numbers. He wants the surveys and analysis done right, instead of "adjusting the results" to suit political expediencies

somnath · Post by **somnath** » 28 Apr 2011 06:33

Suraj wrote:It's much more worthwhile to examine the message than personalize it with one's own view of the messenger - far too much ideological baggage involved. Bhalla makes some excellent points - the NSSO report just perpetuates the same data aggregations distortions across successive surveys, progressively worsening the quality of the data. Increasing the breadth means little when the depth is even less meaningful - quantity doesn't in itself provide for quality.

there is no "baggage" - I quite like Surjit Bhalla..I was only referring to a feeling of deja vu - anyone who has followed SB over the years knows the bee he has in his bonnet about NSSO surveys - read his eminnently readable "Imagine if there was no country.."..

anyways, he makes valid points on methodologies...But this is really the only comprehensive primary data gathering exercise done to measure important variables on income and employment...The other one is the NCAER household Income Survey, which is done annually, and is much less comprehensive..

the issue in India is simple - most of the economy is in the unorganised sector..Hence income data is hard to collate, more so because of a social aversion to disclosing income...So data gathering has to be through proxies like calorie intake etc..and econometric models take some time to stabilise..By the time the models stabilise, the consumption patterns themselves shift dreastically, which is what has been happening with us over the last 15-20 years..

Having said that, SB exaggerates the point, which is his style..While less of the "basket" is being captured in the primary survey, the econometric model used normalises the impact through apprpriate assumptions..the latest model is the work of Suresh Tendulkar (I had posted it earlier), and he has t least as much credibility as a quant economist as SB, in fact a bit more

putnanja wrote:He is basically attacking the NSSO for their shoddy job, saying that the percentage reduction in poverty has remained the same as per NSSO numbers. He wants the surveys and analysis done right, instead of "adjusting the results" to suit political expediencies

Well, NSSO is just a data gathering organisation..He is taking potshots at the PC, and the "povertarians" there..Abhijit Sen, given his known proclivities, is an "easy" target in that respect...

vina · Post by **vina** » 28 Apr 2011 09:23

the issue in India is simple - most of the economy is in the unorganised sector..Hence income data is hard to collate, more so because of a social aversion to disclosing income...So data gathering has to be through proxies like calorie intake etc..and econometric models take some time to stabilise..By the time the models stabilise, the consumption patterns themselves shift dreastically, which is what has been happening with us over the last 15-20 years..

Translated into Inglees, it means as follows.

We cannot do a decent job in getting real relevant data. But we need to come up with a number. We have some half baked data that is wholly unrealistic/out dated/ plain wrong in many respects, but however due to "soup-e-rear" e-Con-o-metric takneeks like we in the great Planning Commission (only we and ISI are the anointed by the supreme powers of the universe with knowledge of stats and e-Con-O-Metrix, no one else can do it and if they do it, it must be inferior to our oh so "soup-e-rear" stats and projections) have, we will feed the "soup-e-rear" model with junk data to come up with half baked numbers and because we have a constitutional postion with a head who has a cabinet rank , it becomes "official" and "right" and all the other good things.

In other industries,there is a word for it called GIGO, Garbage in , Garbage Out. However great your model if you feed it garbage it spews out garbage!

Hey, even if it is plain garbage, if we stamp it, give it a "NOC" and proclaim it as gold, and of course get "Montek" to give it his imprimatur , it is gold!.

somnath · Post by **somnath** » 28 Apr 2011 10:08

^^^Well, there are issues with the data, but it would be wrong to classify it as "garbage"...there is quite a lot of data that IS collated, question is whether the econometric models are good enough to extrapolate 100% of income and consumption from that..

While one can quibble over whether the poverty level is 32% or 25% or 16%, the supporting data uniformly says that whatever that number, it is large...Our HDI metrics for one, per-capita asset ownership of various types of assets for another...

RamaY · Post by **RamaY** » 29 Apr 2011 02:29

Since it is difficult to collate economic data (due to social aversion), one should rely on the scientific and accurate data such as calorie intake etc., The Human Rights groups with their special powers can accurately estimate calorific intake by just looking at the stool samples on the road side. That is accurate data because HDI says so.

somnath · Post by **somnath** » 29 Apr 2011 05:58

RamaY-ji, the sarcasm is entirely misplaced (mind you, Surjit Bhalla doesnt use these bogeys

)..

Economic data isnt difficult to collate due to social aversion (thats a minor point) - it is difficult to collate because of the unorganised nature of the economy..Nevertheless, HDI isnt calculated by human rights groups - there are very intensive exercises carried out, based on primary and secondary research..By some of the best modellers in the world...No one's argued that the data is wholly inaccurate..In case you think the UNDP measures are wrong, why dont you point out the fallacies? SB has been doing exactly that in his long-running critique of NSSO's income surveys - one can agree/disagree, but at least one knows where he is coming from.

Hari Seldon · Post by **Hari Seldon** » 30 Apr 2011 10:23

Quality of Life: India vs. China (Amartya Sen)

The good doctor sri Aamrtya sen goes on to prove that not only is India's HDI much worse than PRC's, its weaker than even BD's and might, gasp, might just have to do with the fact that Indian democracy is undermined and run for the benefit of its minority middle class only from a policy perspective.

Not for the weak-hearted. Interesting read nonetheless.

vera_k · Post by **vera_k** » 30 Apr 2011 11:04

^^

Very disappointing article in that it simply regurgitates what is already known. Given the existence of centralized planning in India, it is debatable as to how much difference there is between the Chinese and Indian models in that the same caveats about misapplication of resources would apply in both cases. The only difference being that a free press limits the ability of the government to carry out genocide, unlike in China.

I'd like to see more research on whether there is a correlation between decentralization of policy and women's empowerment with results obtained in India. A while ago, something that caught my attention was an article about a woman sarpanch saying that her proudest accomplishment was ordering toilets in bulk for the entire village. Now this happened so late because a) the panchayat never existed before 1993 and b) women panchayat leaders had to be elected before they could take action.

There may be a case for further decentralization and women's quotas in all aspects of life for some time if the data can be marshalled.

somnath · Post by **somnath** » 30 Apr 2011 21:01

Some time back, I had posted Isher Judge Ahluwalia's fine report on urbanisation (basically reocmmending JNNURM Part II) here..

Surjit Bhalla's take on it - seems to agree with me!

http://www.indianexpress.com/news/india ... s/783694/0

joshvajohn · Post by **joshvajohn** » 01 May 2011 02:49

Black money in Swiss banks mainly from India: Julian Assange
http://articles.economictimes.indiatime ... wiss-banks

Website to unearth black money in India
http://www.deccanherald.com/content/157 ... india.html

Theo_Fidel · Post by **Theo_Fidel** » 01 May 2011 06:41

I've said this before, but there are a large number of forces in the west that have made it their priority to keep the image of India as a poor and dirty place. Indian writers are often recruited for this purpose and this also gives it an air of authenticity. The good Dr Sen has been a part of this brigade for some time now, esp. after that oh so convenient Nobel prize. He absolutely knows where his pay check is coming from on the lecture circuit.

The next step is to try and sell all kinds of 'tools', 'experts', 'research' and ityadi to a 'stunned' GOI. This is how things work in the US even at the state, company or department level.

This whole HDI comparison is false. The only real valid HDI comparison is as a time series. The HDI we see today was produced 20,30 or 40 years ago. The effect of our recent economic growth will only be apparent 20-30 years from now. The good Dr of course knows all this which is what makes his broadsides particularly odious. Notice how carefully he cherry picks his data, particularly education data. He clean neglects to mention that BD's HDI rate is 0.469 and India's is 0.519. Or how he avoids any mention of data errors or Standard Deviation despite most of the numbers being estimates.

In the case of India we have actual numbers from our census which he again conveniently ignores. Our literacy rate is 74%, BD's estimate is 56.5%. Indias estimated life expectancy per census is 67.5. If he were actually interested about India he would wait till the final census data comes out but undoubtedly his editor gave him a deadline.

Also notice the title. Quality of Life. India vs China. Human development has been equated to quality of life which is simply not accurate. And he knows it too, as he sheepishly try's to clarify.

The bottom line that for 50 years Amartya Sen and his ilk sold us the tonic that democracy would cure all, income poverty did not matter, PDS type food distribution would cure all our ills, NREGA would put money in all the pockets, wealth distribution without wealth creation was ideal and that social reform was not necessary. Our HDI stinks because we fell for these stories. It is time we learned to ignore these professional poverty wallahs.

RamaY · Post by **RamaY** » 01 May 2011 07:08

^
+1 Theoji!

The economic indicators and score cards are a big scam. Yes they serve some purpose to the financial mercantilists who need a tool to put a price to the capital; the more confusing the tool is the better. The model gets manipulated (to reflect the developing geopolitical needs) by adding things like Secularism and Human Rights to the score card models. Now guess who and what basis rate a nation's secularism and human rights...

I will give you an example - How many nations went bankrupt in history and what are they? How many times these indicators predicted those defaults and how many times they caused those defaults? Do today's credit ratings really reflect the characteristics of that historical data?

I am sure that India will never improve its HDI ratings. Tomorrow they will add number of toilets per '000 population. Day after tomorrow it will be number of automobiles (it doesn't matter if a society needs personal automobiles or not). The next day it will be number of fabs per '000 population. The following day, the number of pubs.... It is a mirage the elite economists want India to chase; so they can keep their professions going and growing.

SwamyG · Post by **SwamyG** » 01 May 2011 07:38

Hari Seldon wrote:Quality of Life: India vs. China (Amartya Sen)

The good doctor sri Aamrtya sen goes on to prove that not only is India's HDI much worse than PRC's, its weaker than even BD's and might, gasp, might just have to do with the fact that Indian democracy is undermined and run for the benefit of its minority middle class only from a policy perspective.

Not for the weak-hearted. Interesting read nonetheless.

I had the opportunity to attend an event as part of a series at a local university. Hans Rosling was the speaker. He talked about how the children per women has come down.

Bangladesh Miracle

svinayak · Post by **svinayak** » 01 May 2011 08:20

RamaY wrote:
I am sure that India will never improve its HDI ratings. Tomorrow they will add number of toilets per '000 population. Day after tomorrow it will be number of automobiles (it doesn't matter if a society needs personal automobiles or not). The next day it will be number of fabs per '000 population. The following day, the number of pubs.... It is a mirage the elite economists want India to change; so they can keep their professions going and growing.

Do you think there is a MNC and consumer company behind this. This is a form of social engineering to increase the consumption in a country.

devesh · Post by **devesh** » 01 May 2011 08:56

^^^ more like a group of corporate interests. take for example all the companies in the cosmetics sector, fast food sector, and cool drinks. they might have different brands and products. but ultimately they all come together to implement policies which increase consumerism. you can see this in US Congress. there are a lot of lobby groups where several companies, sometimes even from different sectors, come together and lobby for some specific policy or law.

somnath · Post by **somnath** » 01 May 2011 11:45

Theo_Fidel wrote:I've said this before, but there are a large number of forces in the west that have made it their priority to keep the image of India as a poor and dirty place

This is stunning...So the entire UNDP HDI exercise is a conspiracy to only show India in "poor light"? Yeah, just to give some more grist to the CT mill, the exercise was pioneered by, horror horrors, Mahbub ul Haq - a Pakistani!

When one is unable to challenge either data or methodology, one gets down to imputing motives and CTs..

Theo_Fidel wrote:This whole HDI comparison is false. The only real valid HDI comparison is as a time series. The HDI we see today was produced 20,30 or 40 years ago. The effect of our recent economic growth will only be apparent 20-30 years from now. The good Dr of course knows all this which is what makes his broadsides particularly odious. Notice how carefully he cherry picks his data, particularly education data. He clean neglects to mention that BD's HDI rate is 0.469 and India's is 0.519.

HDI we see today was "produced 40 years ago"?! Have you ever gone through the UNDP report? And "time series"? What is that supposed to mean? That we should stop measuring our progress and wait for 30 years to see where we stand?!

Dr Sen is making a different point -that growth by itself will not solve issues with HDI, which would need specific attention to the key variables in question...He does not "ignore" India's HDI lead at all - he mentions it clearly in the article...He is simply making the point that BD, a much poorer country in all respects, and a much smaller economy, is doing better than India in select HDI variables - which only go to show that GDP growth by itself doesnt solve all issues!

Or how he avoids any mention of data errors or Standard Deviation despite most of the numbers being estimates.

This takes the cake...Of course Dr Sen wasnt writing a technical article on statstical methodologies here..But more pertinently, have you EVER gone through the UNDP methodology? Do you think they dont account for basic statistical concepts? And what do you mean by "standard deviation"? That somehow data for India follows a normal distribution, while for others like BD follows a uniform distribution? Or is it that data from India has unusually fat tails? Or which specific deficiency in the UNDP formulation is problematic from a technical persctive? No details, only a sweeping jibe at, well, nothing..

BTW, actual numbers (incl on literacy and poverty) in India match up pretty well with UNDP projections..Bulk of the data used is not "estimates", but actual data taken from national govts in any case..

Our HDI stinks because we fell for these stories. It is time we learned to ignore these professional poverty wallahs

Really? That is probably why the whole of East Europe, large swathes of Latam (Venezuela, Cuba

) - chaps who too "fell for such stories" have better HDIs than India!

RamaY wrote:I will give you an example - How many nations went bankrupt in history and what are they? How many times these indicators predicted those defaults and how many times they caused those defaults? Do today's credit ratings really reflect the characteristics of that historical data?

RamaY-ji, default history is a very closely monitored variable in the markets...Heard of "Credit Default Swaps"? the largest traded market in the world - they measure exactly that - the credit default probability of an underlying (incl sovereigns)...And Ratings of underlyings absolutely reflect their CDS spreads ...

Its far easier attributing CTs to everything..Far more difficlut to analyse...Do go through the latest UNDP report I had referenced it in this thread sometime back)..

Abhijeet · Post by **Abhijeet** » 01 May 2011 17:16

Somnath, this is absolutely correct. A large proportion of people who post on BR seem to enjoy living in a fantasy land where poverty, ignorance and other assorted ills of India don't exist, and will dismiss any evidence to the contrary.

While India is getting better in many respects, the baseline quality of life of the average Indian is so low that it sometimes seems unbelievable even to me after having lived in India now for a few years. The trend is positive; but the current position on the trend line is incredibly low. Amartya Sen may or may not have the various motivations attributed to him, but his facts are probably quite true.

For the poster who said that the definition of poverty will always change, and that "tomorrow they will add number of toilets per 1000 population" -- are Indians unique in not requiring toilets for some reason? Lack of access to basic sanitation is one of the biggest problems in India, yet you dismiss it so casually.

chola · Post by **chola** » 01 May 2011 17:59

Abhijeet wrote:Somnath, this is absolutely correct. A large proportion of people who post on BR seem to enjoy living in a fantasy land where poverty, ignorance and other assorted ills of India don't exist, and will dismiss any evidence to the contrary.

While India is getting better in many respects, the baseline quality of life of the average Indian is so low that it sometimes seems unbelievable even to me after having lived in India now for a few years. The trend is positive; but the current position on the trend line is incredibly low. Amartya Sen may or may not have the various motivations attributed to him, but his facts are probably quite true.

For the poster who said that the definition of poverty will always change, and that "tomorrow they will add number of toilets per 1000 population" -- are Indians unique in not requiring toilets for some reason? Lack of access to basic sanitation is one of the biggest problems in India, yet you dismiss it so casually.

I agree that the base is extremely low. India's standard of living is pitiful compared to even other states in Asia (especially those who are free like South Korea, Taiwan, Singapore etc.) never mind the US and Europe.

But the trend lines are very good. The balance is to acknowledge the problems so you can continue to fix them and highlight the positive to draw in investment. So the right balance is a point between the two.

But I rather err on the side of the positive if we can't find a balance. The reason is positive news brings in investment which is what will really alleviate poverty. Not acknowledging poverty is a problem only if we have the funds and resources but not the will to fix it. Right now, India doesn't have the resources to remove poverty across a nation of 1 billion. What's more, growth in FDI has dropped in the past few years compared to other developing nations so we are in direct competition for those very resources.

Therefore, it is important that India accentuate the positive trends as much as possible right now. Highlighting the high base quality of life in the tech triangle of Chennai, Bangalore and Hyderabad will get us the FDI that can be used to build up the rest of the nation. Highlighting the poverty of Bihar and Bengal won't.

somnath · Post by **somnath** » 01 May 2011 20:03

Abhijeet wrote:"tomorrow they will add number of toilets per 1000 population" -- are Indians unique in not requiring toilets for some reason?

Abhijeet-ji, +1...If I had one suggestion to make in the current HDI format used by UNDP, I would include access to modern sanitation...Many many moons back (when I didnt have a single gray hair!), I heard Bindeswar Pathak speak at a function - its a shame the number of people with no access to a modern toilet in India...

People cannot fault the piece on data (we have now seen insinuations that the article wouldnt stand "peer review"!), so they have to impute motives to the author...And then, some more CT to somehow impute that there is a "vested interest" in calculating India's numbers poorly...All, without even attempting a half-decent critique (something that Surjit Bhalla does with so much panache)..And therefore criticise allocations to NREGA as rent seeking..the same people dont have a problem with lacs of crores of direct tax exemptions given to the rich every year, lacs of crores of subsidies to the middle class, and of course (in recent experience) literally thousands of crores of tax exemptions to the likes of Shahid Balwa and KP "change-my-red-herring-10-times" Singh to build luxury apartments in the name of SEZs!

chola wrote:India doesn't have the resources to remove poverty across a nation of 1 billion. What's more, growth in FDI has dropped in the past few years compared to other developing nations so we are in direct competition for those very resources.

Chola-ji, FDI plays a very marginal role in India's development (though a more significant role in balancing our ext account)...The good news is increasingly, outlays are becoming less of a problem...We have money to invest in the social sector, and outlays are going up...the issue is in execution....That is a the key, as much poorer countries (BD in some respects, Cuba, parts of Central/East Asia overall) have shown, efficient exection is possible even at lower resource levels...

somnath · Post by **somnath** » 01 May 2011 20:59

It would be helpful Marten-ji, if you could for once, point out the supporting "rationale" of the various CTs/motives et al...On data, or the data collection methodologies, or the analysis being done...Even references (yes, idaly peer reviewed ones!) doing the same..For an example, look no further than Surjit bhalla, someone I quote extensively all the time...

In absence of any of the above, its just hot air and invectives, which you have a fair bit of felicity over, but analysis is far more enriching anyday...

sugriva · Post by **sugriva** » 01 May 2011 21:37

Marten wrote:As I said earlier, Somnath is SuperComprehensionMan, and therefore every other post is instantly dismissed. Well, if you choose to be blind to the motives, who could help you? Denial will only get you so far. Troll on.

Why make personal attacks and be seen as having lost the argument hainji!!!

RamaY · Post by **RamaY** » 01 May 2011 22:14

somnath wrote: RamaY-ji, default history is a very closely monitored variable in the markets...Heard of "Credit Default Swaps"? the largest traded market in the world - they measure exactly that - the credit default probability of an underlying (incl sovereigns)...And Ratings of underlyings absolutely reflect their CDS spreads ...

Somnath-ji,

I am not a finance guy by profession, but I have basic understanding of these matters and hold an embeeye from madarsa-al-Kabeer-tuffa. I also work on the analytics side of developing risk models and score cards. I know how CDSs' work and how they caused 2008 meltdown.

As I mentioned earlier our opinions differ in the fundamental outlook. All these tools and techniques are just tools in my opinion to understand the underlying trends. Yes they are important to do day to day business, but they are useless in understanding the long term trends and making strategies. For example I need a shovel to dig foundations for my house; but I wouldn't plan my house on the basis of shovel size and characteristics.

You seem to have a different take on these. That is perfectly fine.

somnath · Post by **somnath** » 01 May 2011 22:22

Marten wrote:If you look back at the discussions on HDI between SwamyG and me, you'll find the data. I'm hardly about to get back to you with links for your pleasure or education in this matter

thats a good "shoot and scoot" tactic..I am sure HDI and the UNDP effort has been discussed many times in this blog, but I hvent seen any pearls of wisdom making me wiser on why/how the data/analysis/methodolgy is "faulty", or worse motivated..

Marten wrote:About motives, how does one NOT find motive in data collection and analysis if state agencies themselves benefit from the under-reporting

One more gem...Govt of India benefits by overestimating poverty, health indicators, education levels et al...Presumably when it is GOI who needs to cough up the money to tackle the issues! Or is it that there is a mega scam involving everyone starting from Abhijit Sen to the census/NSSO data collectors in cahoots!?

Marten wrote:Bhalla seems to be your go to guy. When you google Bhalla, why not find a few more, and talk about Jaya Mehta (not R Mehta), Bhide, Sen (himself), Jha, Dubey, Datt, and finally how about some analysis of NCAER reports? Let's talk when you transcend Google

Some more gems..Surjit B is certainly a "go to guy" for anyone looking for a contrarian perspective on a number of issues, especially issues with NSSO numbers...And he is a perfect example of a critic basing his critique on solid analysis, not hot air...As for the rest - which NCAER report should be analysed? I deal with half a dozen NCAER outputs at any point in time...NCAER produces hundreds of reports every year...Another great example of your "shoot and scoot" methodlogy...

If you are critiquing UNDP's HDI output, or Sen's article, it is but natural to expect that you would be expected to come up with the rationale, isnt it? Usually thats the way it happens in prpfessional and acadmic circles...Especially given your wide range of non-google acquaintances with economicsts!

Till now, I have only seen some allusions to unsubstantiated CT, and some invectives - I have already conceded you have a fair amount of felicity with the latter, so lets now get to know if there is any substance?

somnath · Post by **somnath** » 01 May 2011 22:29

RamaY wrote:I know how CDSs' work and how they caused 2008 meltdown.

RamaY-ji, correction - CDS is simply a variable measuring credit risk, like stock prices measure risk/value of the stock...So CDS by itself is just a meaure of risk, it is hardly capable of "causing" a crisis..One of the (many) reasons of the crisis was leveraged trading in the CDS market..(btw, your background isnt germane to this discussion, is it?)..

RamaY wrote:Yes they are important to do day to day business, but they are useless in understanding the long term trends and making strategies.

Not sure what you mean by this, especially in context of the HDI discussion..CAn you elaborate?

RamaY · Post by **RamaY** » 01 May 2011 22:34

Somnathji,

On HDI and HDI-based economics.

Imagine you and I are two traders sitting on different side of this HDI trade. Also assume that we have other items in our portfolios. Based on our portfolio and correlation matrix, we assign a specific risk value to the HDI item. Since we are on two different sides of HDI-trade; our risk value will be inversely proportional despite the fact that all other items in our baskets may move according to their correlation factors without our individual baskets and one-Vs-other.

Now try to think who is defining HDI and for what purpose? on what side of the trade India stands in this HDI saga. If you think IMF,WB and other international finance bodies and rating agencies are neutral players; I request you to think again.

P.S: I gave my background info to avoid definitions of basic finance terms.

somnath · Post by **somnath** » 01 May 2011 22:36

Marten wrote:So you wish to establish a contrarian view and that is it?

I am not looking to establish any "view"in this discussion (Amartya Sen/HDI/UNDP), contrairan or otherwise...YOU are the one generally dishing out CTs and invectives - I am only giving you examples of people who critique prevailing wisdom with a bit of wisdom of their own (like SB)....And guiding you to that path (if possible of coure!

)..

Marten wrote:For someone who quoted exactly two reports from Google, you sure have access to a lot of economic data. Apart from your personal attacks, where are the reports then? If you indeed do have access, come up with these 1000s of NCAER reports, and the extrapolations made by any of the five to six economists

As far as I can see, I referenced NO report, from Google or otherwise in this discussion (AS, HDI et al)...Which topic should I bring up "1000s of NCAER reports"? And what extrapolations? By which 5/6 economists? And why them speciifcally? Because you randomly found their names in Google? you have made some sweeping claims on HDI/Sen etc..I havent made any...Ordinarily, in most professional or academic circles, you wuld be asked to back it up!

BTW, yes I do have access to large repository of economic data/commentary, and I dont need google for that...But besides the point, no? Please back up your claims or desist!

Yes, btw, where are teh "personal attacks" you saw?

somnath · Post by **somnath** » 01 May 2011 22:49

RamaY wrote: Imagine you and I are two traders sitting on different side of this HDI trade. Also assume that we have other items in our portfolios. Based on our portfolio and correlation matrix, we assign a specific risk value to the HDI item. Since we are on two different sides of HDI-trade; our risk value will be inversely proportional despite the fact that all other items in our baskets may move according to their correlation factors without our individual baskets and one-Vs-other.

Now try to think who is defining HDI and for what purpose? on what side of the trade India stands in this HDI saga. If you think IMF,WB and other international finance bodies and rating agencies are neutral players; I request you to think again.

First up, HDI is not being "traded" on any market..Whether India's HDI score is "high" or "low" does not get into any equation of commercial decisions taken by commercial entities...Second, It does not come into any economic assessment of India either, certainly not in terms of ratings or market attractiveness...If anything, people like Amartya Sen argue that India is too obsessed with the hard economic numbers like GDP and not so much with our HDI...

Three, not sure how IMF/WB come into the discussion...We are not debtors to IMF in any case (we are creditors now!), and WB loans form a relatively small part of our external borrowings now..

Iam still fuzzy in the long term assessment you are referring to..

Yes, one more point...all the raw data used in UNDP comes from the national govts..Its not as if UNDP just picks up any number it wants to..

RamaY · Post by **RamaY** » 01 May 2011 23:02

^ HDI is not traded, that we all know. What is the purpose of it? How is it used in developing credit score cards? How does it impact a nation's credit ratings and interest rates? Are you 100% sure that HDI and other subjective matters like political stability, corruption, and human rights are not included in the credit rating agency models?

Who asked the WB to come up with the HDI? What did WB do to improve the HDI of any country?

Can you please stop pulling names, as I have no interest or respect in what Amartya Sens of this world have to say. If something logical I am sure both of us are capable of understanding it irrespective of what A.Sen said or not.

somnath · Post by **somnath** » 01 May 2011 23:08

Marten wrote:Somnath, Bhide and Mehta have considerable work on analysis of NSS data. Surely you are aware of it

Are you serious?! Shashank Bhide and Aasha Kapur Mehta are some of the card-carrying members of the "povertarian" camp if anything...And you are saying their analysis counters Sen's? Have you even read their "economic growth and poverty dynamics"? Even if you tried, you couldnt have come up with a worse example to butress your credentials as a serious amateur!

Marten wrote:TF saar clearly showed how Sen avoided using 2011 data when it was already available. There is no CT in assuming he was either asked to or did so for the purpose of recording his "views" - for all your words, you missed my point - it was an article, not a research paper

Which data did he miss? Literacy? He clearly mentioned the latest Census figures on that count...And yes of course it was an article, though Theo tried critiquing the same for its failure to mention (of all things!) standard deviation of estimates!

Marten wrote:About the basic collection itself - the issue lies with the 365 day cycle of estimating expenditure, and the complete ignoring of home-cultivation while calculating consumption/food intake

What is the issue with "365 day cycle of estiamting expdt"? Do you know which commodities are measured in "365 day cycles", and which commodities in "30 day cycles"? And it "ignores" home cultivation? In what way? NSSO collects calorie intake norms from the last survey onwards, it used to collect calorie consumption (30 ldays) earlier..And cross check with normative health indicators for consistency...

There are issues with NSSO data - and yes SB enumerates it better than anyone...Mostly with respect to the fact that it collects data on a smaller portion of the PFCE pie than earlier...And then depends on the model to adjust...

But poverty is but one of the HDI variables, and in fact one that most people (Amartya S included) are anyway most sanguine about..Its the others that are a bigger problem...

yes, btw - here is the methodology for poverty level estimation - THIS, I ha\d posted earlier...(and its not from Google!)..
http://planningcommission.nic.in/report ... ep_pov.pdf

somnath · Post by **somnath** » 01 May 2011 23:13

RamaY wrote:^ HDI is not traded, that we all know. What is the purpose of it? How is it used in developing credit score cards? How does it impact a nation's credit ratings and interest rates? Are you 100% sure that HDI and other subjective matters like political stability, corruption, and human rights are not included in the credit rating agency models?

Who asked the WB to come up with the HDI? What did WB do to improve the HDI of any country?

Can you please stop pulling names, as I have no interest or respect in what Amartya Sens of this world have to say. If something logical I am sure both of us are capable of understanding it irrespective of what A.Sen said or not.

HDI has NO bearing on a country's credit rating or credit spreads (what you refer to as "interest rates")...Either by multilateral agencies or by the financial market...

Ratings agencies include factors like political stability in thier models (as they should), but not HDI scores...

Who asked WB to come up with HDI? Well I have no idea...It was developed first by Mahbub ul Haq, who worked for WB..And what does WB do on HDI? Actually quite a lot..they sponsored the whole concept of MDGs that the whoel world signed up to...And there is a lot of funding of various proects globally by WB to achieve 2015 MDGs...Including some in India...Countries like BD would receive MASSIVe fudning from WB to achive MDGs...

BTW, I am not dropping AS's name - the whole discussion started with his article and people generally dissing that on completely unsubstantiated grounds..

RamaY · Post by **RamaY** » 01 May 2011 23:23

WB's loan to BD in 2010 is $828M; not massive compared to India's $1B long term loan.

The two scoring models I participated in used HDI among many other subjective parameters in their models.

Abhijeet · Post by **Abhijeet** » 02 May 2011 00:42

My general observation that the baseline quality of life everywhere in India is incredibly poor (inside and outside the tech triangle, or indeed in any region in India) is based on the almost complete breakdown of local governance everywhere.

Most people in India live in cities, towns and villages with:

- Unreliable and expensive electricity
- Unreliable, impure or unattainable running water supply
- Mostly untreated sewage being dumped into the nearest water body
- Inefficient or non-existent public garbage collection
- Inadequate or non-existent public transport
- Badly surfaced and inadequate road networks
- A judicial system that will take years or decades to resolve simple cases
- A law enforcement system that is apathetic at best and positively malevolent at worst
- A dysfunctional primary education system
- A dysfunctional public health system

It is especially sad that primary education and basic healthcare -- two cornerstones of a civilized society -- have been turned over almost completely by the government to the private sector, with no decent fallback system for the poor who can't afford private outlets.

In India, you are truly on your own. If something happens to you, there is almost no way to get redress within the rules of a civilized society.

I think it's creditable that India marches on despite all these shortcomings. Yet until we fix these shortcomings there will always be hundreds of millions of people who can never climb aboard the development bus. Theo correctly said that the demographic dividend is a one-time thing, the next 35 years or so. Without fixing these basic governance issues, trying to hide our failings so that we get more FDI isn't going to make it possible for us to lift all our people out of poverty in time.

Jaspreet · Post by **Jaspreet** » 02 May 2011 00:50

Abhijeet: +100.

Theo_Fidel · Post by **Theo_Fidel** » 02 May 2011 06:48

Abhijeet wrote: Without fixing these basic governance issues, trying to hide our failings so that we get more FDI isn't going to make it possible for us to lift all our people out of poverty in time.

We have been talking about and trying to fix this for 50+ years. You can talk about sincerity, effort, honesty, etc but this is the end result.

I have come to the view that governance is a function of the people. Undisciplined people get indifferent governance. Our dividend has begun and we don't have the time to go through another round of arguing about what works and what doesn't. Of all the democracies in the world we are alone in growing at 9%+ annually. This makes us unique. No other democracy is even close.

The only thing that appears to work in India is money. The more money people have the better their life becomes. Yes we then have problems like ultra-sound female abortions in Haryana & Punjab but these can then be isolated and ended over time. Do what ever it takes to keep growing and we just have to throw money at our problems. Horribly inefficient but in our desperate timescale the only effective option. This is why I oppose things like NREGA, that is foisted on us by Sen types. It diverts resources away from growth and keeps us poor longer. This year for instance entire fields around mine are going un-planted as the NREGA workers don't show up any more. Not only that they are showing up with bad work practices. The group hired for my farm only works from 9-3 pm with a lunch break. Several of them were 60+ years old and really can't do manual labor any more. They took 2 weeks to do what they did in one week earlier. In effect they got paid less for doing the same work for more time. They now need the NREGA money as they are not saving any from the planting season as they used to. Productivity is down.

This is why Sen and his types in the west are so poisonous, esp. as they know all this. They cloud the atmosphere with words of doubt that even elite types buy into, esp. when they have no experience of the ground realities. Their aim is the move our focus away from rapid growth so we can no longer be a threat. Not only that they are paid to sow this doubt in our minds. Desh-Drohi's every last one of them. And make no mistake a indisciplined wealthy India is a huge threat to the world.

The best example is the tussles between the ICC and BCCI. Eventually the 'indisciplined' BCCI decided to do its own thing with its money and made the ICC essentially irrelevant.Or the undisciplined TATA conglomerate simply overwhelming CORUS with raw cash/wealth. Don't listen to them, grow India grow.

somnath · Post by **somnath** » 02 May 2011 10:13

RamaY wrote:WB's loan to BD in 2010 is $828M; not massive compared to India's $1B long term loan.

The two scoring models I participated in used HDI among many other subjective parameters in their models.

Not sure of WB's total commitment (or "stock" of debt) to BD, but a flow of 800 million annually is MASSIVE to a country with a GDP of barely 80-90 billion dollars...Just do the "% of GDP" maths..

Added later: Total WB commitment to BD's external debt is nearly half - 10 billion out of a debt stock of 20..
http://www.erd.gov.bd/images/FlowBook/0910/tbl-7.0.pdf

So WB is massively involved thre, which is to be expected...

Not sure which "scoring models" you are referring to, and wht they were intending o do, but neither credit ratings nor credit spreads take HDI scores as an input...

somnath · Post by **somnath** » 02 May 2011 10:36

Marten wrote:Somnath, will you play coy for much longer? I clearly said if you can quote Bhalla, why not his friends

Well, I am confused...What is your point? You quoted Bhide and Mehta as "counters" to Amartya Sen - without kowing the most obvious ideological proclivities that they have...You obviously havent read anything written by them - just threw in some name...What ws the point?

I said before, if you want reasoned critique of NSSO numbers (and Suresh T!), Surjit B is a good source...But even he doesnt get into alleging that HDI numbers are all motivated and "cooked up"...His limited point is with NSSO surveys on PFCE...He is an example for you in case you want to critique what Amartya S is saying...But you obvioulsy have none of the patience or inclination to do anything of that sort!

Marten wrote:but please do also consider pilferage from welfare schemes (by everyone in the distribution chain) and any possible motives for the distribution chain to over-report poverty! Even S Tendulkar said the number of poor must go up, but based on different criteria (basically higher intake).

Pilferage is a well known issue in India..And when Amartya S quotes the example of BD, that is precisely the point he is making...BD obvioulsy has less money to throw at the problem, but still have better outcomes in some of the variables - execution is the point..
And yes, read that report by Suresh T, on why various methodological changes have been made - its a continuous process..All models go through that...Briefly, poverty criteria need to be updated to account for inflation...A few years ago, the ballpark was a "dollar a day"..Today the "ideal" ballpark is taken to be "2 dollars a day"...

Marten wrote:Aadhar will enable enforcing the 30 day INCOME cycle (rather than 365 Expenditure - this changed in 2003 btw

you are thoroughly confused, or unable/unwilling to read, or maybe both...There is nothing UID can do about "income assessment" in a country where 90% of the economy is unorgansied...If you are referring to NSSO survey principles - go through the report..I pointed the relevant section out - which commodities are measured ona 30 day cycle and which ones on 365 day are explained there..

there ARE "comprehension" issues usually on any statistical exercise, but normally of the "informed" type at an arcane level...

Which is why SB is so good, he can deconstruct the arcane into more understandable language...But here, one is not even sure what you are trying to prove (barrign a huge CT involving everyone from Suresh T, Montek A downwards to all data collectors in the country in a motivated exercise of making India "look bad").....

You can still do that, but get some better sources...Referencing Bhide and Mehta dont make your case, or your credibility as a serious amateur!

Finally, poverty is only one of the many HDI variables...And it is one place that most people, AS incl, are most sanguine about...It is the other variables- child mortality, health, literacy -that we have a bigger issue...

sugriva · Post by **sugriva** » 02 May 2011 11:18

Theo_Fidel wrote: Do what ever it takes to keep growing and we just have to throw money at our problems. Horribly inefficient but in our desperate timescale the only effective option. This is why I oppose things like NREGA, that is foisted on us by Sen types. It diverts resources away from growth and keeps us poor longer.

Your point may have been moot if not for the fact that savings that are available for investment are around 35% of the GDP of this country. With a 2 trillion USD GDP this year this translates to ~600 billion USD right? Given the above numbers how does a spending of 10 billion dollars on NREGA make a difference to what's available for investment? Rather I believe that the quality and quantity of investment opportunities available in desh are not worth talking about and hence our failure to grow faster that 9%. More investment can only be facilitated by improving our HDI, poverty and number of toilets per 1000 population, a point perhaps that Amartya Sen etc seem to be making. If there aren't enough educated fitters, welders, electricians around how do you plan to increase investment beyond a point ? Also these people need to be well fed and have access to affordable healthcare, right? After all the biggest investments need to be made in human capital. Without it capitalism will not survive in India.

As I see it, your angst at NREGA expenditure is perhaps driven by not getting enough labour at cheap rates to work your fields so that you can get rich faster

But then NREGA as a scheme has been criticised for paying less than the required minimum labour rate no? .......