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Twitter opening first R&D centre outside US in Bangalore
Twitter’s big on India. It just acquired its first Indian startup, Bangalore-based ZipDial last month, and now, the company is opening a research in design centre in Bangalore, reports The Financial Times. This is Twitter’s first office of the kind outside the United States.
According to the report, Twitter plans to use ZipDial’s team as the basis for its new R&D facility to speed up its growth in emerging markets such as India and Indonesia, which are set to be its two fastest-growing markets this year. According to a report by research firm eMarketer, India is set to become Twitter’s largest market after the US with 40 million users by 2018.
There are no details yet on what exactly will Twitter do with the R&D centre. but Valerie Wagoner, ZipDial’s founder who is now a Twitter employee did confirm to The Times that it would be used to build new products for emerging markets and will not simply be a Silicon Valley back office.
Twitter’s big on India. It just acquired its first Indian startup, Bangalore-based ZipDial last month, and now, the company is opening a research in design centre in Bangalore, reports The Financial Times. This is Twitter’s first office of the kind outside the United States.
According to the report, Twitter plans to use ZipDial’s team as the basis for its new R&D facility to speed up its growth in emerging markets such as India and Indonesia, which are set to be its two fastest-growing markets this year. According to a report by research firm eMarketer, India is set to become Twitter’s largest market after the US with 40 million users by 2018.
There are no details yet on what exactly will Twitter do with the R&D centre. but Valerie Wagoner, ZipDial’s founder who is now a Twitter employee did confirm to The Times that it would be used to build new products for emerging markets and will not simply be a Silicon Valley back office.
Echo_419
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Force Motors to set up new facility at Chakan - The Economic Times
NBPPL, APGenco sign MoU for supply of spare parts - The Economic Times
Pharma exports to reach Rs 1.1 lakh crore by FY'16 - The Economic Times
Adani Enterprises to set up country's largest 10,000 MW solar plant in Rajasthan - The Economic Times
India wants transformative technology from US - The Economic Times
NBPPL, APGenco sign MoU for supply of spare parts - The Economic Times
Pharma exports to reach Rs 1.1 lakh crore by FY'16 - The Economic Times
Adani Enterprises to set up country's largest 10,000 MW solar plant in Rajasthan - The Economic Times
India wants transformative technology from US - The Economic Times
http://www.ft.com/cms/s/0/ec25e6b4-b066-11e4-a2cc-00144feab7de.html#axzz3RJ7SK6wq
©AFP
Indian economic growth has surged above 7 per cent a year and is set to overtake China’s, official figures show, but investors and economists say they are suspicious of the latest statistics following recent adjustments.
India’s gross domestic product grew 7.5 per cent in the three months to December and is expected to expand 7.4 per cent in the financial year to end March, the Central Statistics Office announced on Monday. That matches Chinese growth of 7.4 per cent in the 2014 calendar — the slowest in 24 years.
However, India’s high official growth is the result of switching from a base year of 2004-5 to 2011-12, among other adjustments. Those changes pushed up 2013-14 GDP growth from 4.7 to 6.9 per cent, while growth in the previous year was revised from 4.5 to 5.1 per cent.
London-based Capital Economics said the rebased GDP remained “wildly inconsistent with numerous other indicators that point to continued economic slack”. Although Indian growth in the latest quarter was down from 8.2 per cent on the previous quarter, the outcome was still “incredibly strong” and showed India expanding faster than China in the December quarter.
Foreign investors and Indian business leaders are also deeply sceptical about the new calculations, and say activity is only now beginning to pick up — and not in a particularly robust way.
The latest data showing rapid growth have potentially significant implications both for monetary policy and Indian politics, since they suggest that the Reserve Bank of India might have to reconsider its stance of gradually easing interest rates as inflation falls.
So far, however, there is such confusion about the numbers that few expect Raghuram Rajan, the central bank governor, to become an overnight hawk as a result of them.
Nor has the opposition Congress party made much capital out of the statistical conclusion that the Indian economy was accelerating when everyone thought it had collapsed below 5 per cent in the lacklustre latter years of the Congress-led coalition government.
<div class="storyvideonojs"><div><p>You need JavaScript active on your browser in order to see this video.</p><img alt="No video" src="http://im.ft-static.com/m/img/logo/no_video.gif" /></div></div>
Finally, ministers in Narendra Modi’s Bharatiya Janata party government have not been eager to boast about India’s newfound — but so far theoretical — economic prowess.
Arvind Subramanian, the government’s chief economic adviser, praised the ministry of statistics for “having done an outstanding job of revising the GDP estimates”. In an interview last week with Business Standard, he described the improvement in data, methods and analysis as “simply superb and on a par with international standards”.
But he went on to say that he was “puzzled” by some of the “mystifying” numbers. “The year 2013-14 was a crisis year — capital flowed out, interest rates were tightened and there was consolidation — and it is difficult to understand how an economy’s growth could be so high and accelerate so much under such circumstances,” he said.
Chandrajit Banerjee, who heads the Confederation of Indian Industries, welcomed the evidence of rapid growth. “Although this may seem much stronger than what industry had been experiencing, it can be explained by the new methodology which is in line with international norms and uses value addition rather than production to measure GDP,” he said.
©AFP
Indian economic growth has surged above 7 per cent a year and is set to overtake China’s, official figures show, but investors and economists say they are suspicious of the latest statistics following recent adjustments.
India’s gross domestic product grew 7.5 per cent in the three months to December and is expected to expand 7.4 per cent in the financial year to end March, the Central Statistics Office announced on Monday. That matches Chinese growth of 7.4 per cent in the 2014 calendar — the slowest in 24 years.
However, India’s high official growth is the result of switching from a base year of 2004-5 to 2011-12, among other adjustments. Those changes pushed up 2013-14 GDP growth from 4.7 to 6.9 per cent, while growth in the previous year was revised from 4.5 to 5.1 per cent.
London-based Capital Economics said the rebased GDP remained “wildly inconsistent with numerous other indicators that point to continued economic slack”. Although Indian growth in the latest quarter was down from 8.2 per cent on the previous quarter, the outcome was still “incredibly strong” and showed India expanding faster than China in the December quarter.
Foreign investors and Indian business leaders are also deeply sceptical about the new calculations, and say activity is only now beginning to pick up — and not in a particularly robust way.
The latest data showing rapid growth have potentially significant implications both for monetary policy and Indian politics, since they suggest that the Reserve Bank of India might have to reconsider its stance of gradually easing interest rates as inflation falls.
So far, however, there is such confusion about the numbers that few expect Raghuram Rajan, the central bank governor, to become an overnight hawk as a result of them.
Nor has the opposition Congress party made much capital out of the statistical conclusion that the Indian economy was accelerating when everyone thought it had collapsed below 5 per cent in the lacklustre latter years of the Congress-led coalition government.
<div class="storyvideonojs"><div><p>You need JavaScript active on your browser in order to see this video.</p><img alt="No video" src="http://im.ft-static.com/m/img/logo/no_video.gif" /></div></div>
Finally, ministers in Narendra Modi’s Bharatiya Janata party government have not been eager to boast about India’s newfound — but so far theoretical — economic prowess.
Arvind Subramanian, the government’s chief economic adviser, praised the ministry of statistics for “having done an outstanding job of revising the GDP estimates”. In an interview last week with Business Standard, he described the improvement in data, methods and analysis as “simply superb and on a par with international standards”.
But he went on to say that he was “puzzled” by some of the “mystifying” numbers. “The year 2013-14 was a crisis year — capital flowed out, interest rates were tightened and there was consolidation — and it is difficult to understand how an economy’s growth could be so high and accelerate so much under such circumstances,” he said.
Chandrajit Banerjee, who heads the Confederation of Indian Industries, welcomed the evidence of rapid growth. “Although this may seem much stronger than what industry had been experiencing, it can be explained by the new methodology which is in line with international norms and uses value addition rather than production to measure GDP,” he said.
RisingShiningSuperpower
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The truth alone prevails.
Indian economy is growing rapidly. India's future is bright.
All success is due to Modi-ji's brilliant leadership.
India will be a superpower by 2020!
Indian economy is growing rapidly. India's future is bright.
All success is due to Modi-ji's brilliant leadership.
India will be a superpower by 2020!
India growth forecast puzzles economists | Business | DW.DE | 09.02.2015
India's Statistics Ministry reported Monday growth domestic product (GDP) in the country would rise by 7.4 percent in the current fiscal year ending March.
Under a recently introduced new formula for calculating economic performance, the authorities had earlier revised the forecast expansion to 6.9 percent from 4.7 percent.
The new figures presented Monday surprised both domestic and international experts as Asia's third-largest economy had widely been believed to be struggling through its worst slowdown since the 1980s with growth below 5 percent and hence not enough to generate enough jobs for millions of young people.
Lot of guess work involved
But the new data suggested that India's economy was in fact expanding fast, with officials saying the new formula was closer to international standards. GDP is now measured with a focus on actual market prices to incorporate "gross value addition" in goods and services as well as indirect taxes.
tcw vc
India's economy boosted by oil prices
Analysts warned, though, the new method did not correlate with some other important economic indicators such as corporate profit and last year's industrial output.
"These numbers come as a surprise and we are in the process of trying to understand them," said D.K. Joshi, chief economist at local ratings agency CRISIL.
Growth revision figures came out weeks before India's annual budget is to present on February 28, putting Finance Minister Arun Jaitley under pressure as he needs to work through the statistical cloud in drafting the budget.
hg/sri (AFP, dpa)
India's Statistics Ministry reported Monday growth domestic product (GDP) in the country would rise by 7.4 percent in the current fiscal year ending March.
Under a recently introduced new formula for calculating economic performance, the authorities had earlier revised the forecast expansion to 6.9 percent from 4.7 percent.
The new figures presented Monday surprised both domestic and international experts as Asia's third-largest economy had widely been believed to be struggling through its worst slowdown since the 1980s with growth below 5 percent and hence not enough to generate enough jobs for millions of young people.
Lot of guess work involved
But the new data suggested that India's economy was in fact expanding fast, with officials saying the new formula was closer to international standards. GDP is now measured with a focus on actual market prices to incorporate "gross value addition" in goods and services as well as indirect taxes.
tcw vc
India's economy boosted by oil prices
Analysts warned, though, the new method did not correlate with some other important economic indicators such as corporate profit and last year's industrial output.
"These numbers come as a surprise and we are in the process of trying to understand them," said D.K. Joshi, chief economist at local ratings agency CRISIL.
Growth revision figures came out weeks before India's annual budget is to present on February 28, putting Finance Minister Arun Jaitley under pressure as he needs to work through the statistical cloud in drafting the budget.
hg/sri (AFP, dpa)
Chronos
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@DRAY and others here.
I've heard that Raguram Rajan (RBI director) express his opinion that the revised economic growth figures to be puzzling.
What herefers to is that macro economic factors on the face of it, seems to indicate sluggish growth, though the new figures seem to say India is growing fast.
I've heard that Raguram Rajan (RBI director) express his opinion that the revised economic growth figures to be puzzling.
What herefers to is that macro economic factors on the face of it, seems to indicate sluggish growth, though the new figures seem to say India is growing fast.
Moneyguruindia - GDP growth data continues to confuse
Moneyguruindia - GDP growth data continues to confuse
Indian growth data continue to confound. Following the revision in annual real GDP growth in FY13 and FY14, the Central Statistical Organisation (CSO) on Monday estimated that real GDP growth is expected to rise an even more robust 7.4 per cent year-on-year in FY15, from 6.9 per cent year-on-year in FY14.
The quarterly data for FY15 were accordingly revised higher by around 1.6 pp as compared with the old series. In Q4 2014, real growth rose 7.5 per cent year-on-year, slightly lower than the 8.2 per cent year-on-year in Q3, owing to lower agricultural sector growth, which offsets the strong pickup in non-agricultural growth (mainly services).
The sudden jump in growth rates is due to a change in the real GDP growth estimation methodology. Earlier, real GDP growth was estimated as a change in volume, while the new series estimates value added at each stage. Also, the government now uses sales tax, service tax and corporate performance data to estimate quarterly GDP. As a result of these changes, growth in industry (especially manufacturing) and the services sector (financial and real estate and government services) is much stronger in the new series.
On the demand side, consumption (both private and government) are estimated to rise sharply.
If the numbers are correct, then the GDP data suggest that the economy has been rising at a much faster pace than estimated earlier and that potential growth in the Indian economy is still above 7 per cent. However, the composition of growth is still biased towards consumption, while investment demand remains relatively sluggish, reducing the need for the Reserve Bank of India (RBI) to ease monetary policy as it will only further stimulate consumption demand, which is not required at this stage.
However, there are reasons to question the new data and methodology. Our prognosis based on other high frequency indicators, CPI inflation and credit growth, is that economic growth fell sharply during 2011-13, bottomed out in 2013-14 and has been gradually recovering since mid-2014. Forward-looking indicators suggest that it is in the initial stages of a cyclical recovery and the economy should gather pace in FY16 owing to easier financial conditions, reduced policy uncertainty, lower inflation and rising confidence.
Based on the new series, we expect real GDP growth to rise 7.5-8.0 per cent year-on-year in FY16. Further clarification from the statistical agency on the sharp changes is necessary before drawing any policy conclusions.
Moneyguruindia - GDP growth data continues to confuse
Indian growth data continue to confound. Following the revision in annual real GDP growth in FY13 and FY14, the Central Statistical Organisation (CSO) on Monday estimated that real GDP growth is expected to rise an even more robust 7.4 per cent year-on-year in FY15, from 6.9 per cent year-on-year in FY14.
The quarterly data for FY15 were accordingly revised higher by around 1.6 pp as compared with the old series. In Q4 2014, real growth rose 7.5 per cent year-on-year, slightly lower than the 8.2 per cent year-on-year in Q3, owing to lower agricultural sector growth, which offsets the strong pickup in non-agricultural growth (mainly services).
The sudden jump in growth rates is due to a change in the real GDP growth estimation methodology. Earlier, real GDP growth was estimated as a change in volume, while the new series estimates value added at each stage. Also, the government now uses sales tax, service tax and corporate performance data to estimate quarterly GDP. As a result of these changes, growth in industry (especially manufacturing) and the services sector (financial and real estate and government services) is much stronger in the new series.
On the demand side, consumption (both private and government) are estimated to rise sharply.
If the numbers are correct, then the GDP data suggest that the economy has been rising at a much faster pace than estimated earlier and that potential growth in the Indian economy is still above 7 per cent. However, the composition of growth is still biased towards consumption, while investment demand remains relatively sluggish, reducing the need for the Reserve Bank of India (RBI) to ease monetary policy as it will only further stimulate consumption demand, which is not required at this stage.
However, there are reasons to question the new data and methodology. Our prognosis based on other high frequency indicators, CPI inflation and credit growth, is that economic growth fell sharply during 2011-13, bottomed out in 2013-14 and has been gradually recovering since mid-2014. Forward-looking indicators suggest that it is in the initial stages of a cyclical recovery and the economy should gather pace in FY16 owing to easier financial conditions, reduced policy uncertainty, lower inflation and rising confidence.
Based on the new series, we expect real GDP growth to rise 7.5-8.0 per cent year-on-year in FY16. Further clarification from the statistical agency on the sharp changes is necessary before drawing any policy conclusions.
Transformed into a tiger, overnight - The Hindu
Economists, statisticians and analysts are sure to come up with varying interpretations as they gorge into the data in the coming days
Believe it or not, India’s economy has transformed overnight from a snail that had lost its way into a roaring tiger. From the originally estimated 5.5 per cent in 2014-15, GDP growth is now expected to catapult to 7.4 per cent, a figure that would take it past the Chinese dragon and into pole position among major world economies in terms of economic growth.
Never mind that other economic indicators and anecdotal evidence from the ground point in the opposite direction. Industrial output is struggling to grow and averaged a mere 2.2 per cent in the April-November period of this fiscal while exports growth in April-December was just 4.02 per cent. Industry is complaining of slow offtake, with consumer durables, a segment that shows the strength of private spending, clocking negative growth. The Reserve Bank of India said in its latest monetary policy statement that “domestic activity is likely to have remained subdued in Q3 of 2014-15” warning that growth expectations have to be ‘tempered’. In what could be interpreted as scepticism over the revision in GDP numbers, the central bank said that it would need to carefully analyse the revised data. Chief Economic Adviser Arvind Subramanian is on record that he’s ‘mystified’ by the revised GDP estimates for 2012-13 and 2013-14 that were released on January 30 because they are “at odds with other features of the macro economy”.
CSO estimates exude optimism
But yet, the Central Statistics Office (CSO) estimates exude optimism, and officials have commended the new data set for immediate use in policymaking. The CSO, which is responsible for collating and calculating macroeconomic data for the government, has changed the way it measures GDP from factor cost to gross value added. It has also included sectors such as transport, communication, banking and insurance along with performance of the corporate sector while estimating manufacturing growth, which is a first.
As per the new data, the industry segment of financial, real estate and professional services is estimated to have grown at an astounding 13.7 per cent in 2014-15 while trade, hotels, transport and communication growth is estimated at 8.4 per cent. Even manufacturing, assumed to be in the wilderness now, shows a 6.8 per cent growth estimate. Is this due to the inclusion of corporate sector performance? If yes, it would be surprising given that revenue and earnings growth has been sluggish in the last few quarters.
Economists, statisticians and analysts are sure to come up with varying interpretations as they gorge into the data in the coming days and not all of it is likely to be supportive of the findings. It would, therefore, be wise to put off celebrations for now.
Keywords: Economists, GDP, Reserve Bank of India economy growth
Economists, statisticians and analysts are sure to come up with varying interpretations as they gorge into the data in the coming days
Believe it or not, India’s economy has transformed overnight from a snail that had lost its way into a roaring tiger. From the originally estimated 5.5 per cent in 2014-15, GDP growth is now expected to catapult to 7.4 per cent, a figure that would take it past the Chinese dragon and into pole position among major world economies in terms of economic growth.
Never mind that other economic indicators and anecdotal evidence from the ground point in the opposite direction. Industrial output is struggling to grow and averaged a mere 2.2 per cent in the April-November period of this fiscal while exports growth in April-December was just 4.02 per cent. Industry is complaining of slow offtake, with consumer durables, a segment that shows the strength of private spending, clocking negative growth. The Reserve Bank of India said in its latest monetary policy statement that “domestic activity is likely to have remained subdued in Q3 of 2014-15” warning that growth expectations have to be ‘tempered’. In what could be interpreted as scepticism over the revision in GDP numbers, the central bank said that it would need to carefully analyse the revised data. Chief Economic Adviser Arvind Subramanian is on record that he’s ‘mystified’ by the revised GDP estimates for 2012-13 and 2013-14 that were released on January 30 because they are “at odds with other features of the macro economy”.
CSO estimates exude optimism
But yet, the Central Statistics Office (CSO) estimates exude optimism, and officials have commended the new data set for immediate use in policymaking. The CSO, which is responsible for collating and calculating macroeconomic data for the government, has changed the way it measures GDP from factor cost to gross value added. It has also included sectors such as transport, communication, banking and insurance along with performance of the corporate sector while estimating manufacturing growth, which is a first.
As per the new data, the industry segment of financial, real estate and professional services is estimated to have grown at an astounding 13.7 per cent in 2014-15 while trade, hotels, transport and communication growth is estimated at 8.4 per cent. Even manufacturing, assumed to be in the wilderness now, shows a 6.8 per cent growth estimate. Is this due to the inclusion of corporate sector performance? If yes, it would be surprising given that revenue and earnings growth has been sluggish in the last few quarters.
Economists, statisticians and analysts are sure to come up with varying interpretations as they gorge into the data in the coming days and not all of it is likely to be supportive of the findings. It would, therefore, be wise to put off celebrations for now.
Keywords: Economists, GDP, Reserve Bank of India economy growth
Beidou2020
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Almost overnight, India overtook China in GDP growth %.
Magic.
Magic.
The new GDP series: Questions abound | The Financial Express
The revision in data of any economic variable is necessary as the entire product and services baskets keep changing over time for an emerging economy. Therefore, the base years need to be revisited periodically and shifting the same to 2011-12 for GDP appears pragmatic. Aligning the concept to the globally accepted practice of reckoning the variable at market prices makes sense for comparison.
That said, the new series introduced by the ministry of statistics will take time to be absorbed as it has brought out a plethora of data to the table, leaving behind several questions in the minds of the readers. To begin with, the choice of the base year hangs in suspension as usually all base years are considered to be normal years. Here, the choice looked appropriate given that this year was the first one from whence there was a sharp decline in growth based on the old series. But the data put forth now, which starts really from FY13 and FY14, are so different that this premise can be questioned and we will never know whether this was the right choice.
The problem begins with the GDP growth rates under the new concept coming in at 5.1% and 6.9%, respectively, in FY13 and FY14, compared with 4.5% and 4.7% (at factor cost) under the old series. Normally, when base years change, there is always a change in growth rates, but we have never seen a turnaround in judgements due to a change in concept. The first strike is one of embarrassment, as whatever negative was spoken about the earlier political regime with euphemisms of a non-functional government with policy angina are cast aside as the economy was actually very dynamic and there was a V-shaped recovery in FY14 compared with stagnation which was a conclusion drawn from the old series data for FY14.
In fact, given the changes in the concept where we include net product taxes, one could look at just gross value added (GVA). Growth in GVA still comes to 4.9% and 6.6%, respectively, which means that taxes per se are not the reason for this difference and the economy was really growing. Or rather the new coverage has grown sharply. What, then, can account for this big change in GDP?
The sector-wise growth in GVA shows that everything that economist and analysts were saying was incorrect. Mining now has grown by 5.4% against minus 1.4% in the old series, manufacturing by 5.3 perfect as against minus 0.7%, and trade, repair and hotels by 13.3% against 1% earlier. These numbers are radical changes in the structure now presented. If these numbers reflect better coverage and are hence are more exhaustive, then we were wrong in saying that the mining irregularity affected growth and that industry was buffeted by absence of policy movement.
At the theoretical level, there are two questions. First, as the sizes of GDP at current prices under the old and new series are almost identical for 2013-14, it is hard to believe that when converted to real terms (both the concepts are at market prices), growth can increase sharply. The implication is that the real economy suddenly became buoyant with better coverage and reporting. Curiously, in this concept, if GVA grows by a stable number but net taxes rise sharply due to higher taxes or lower subsidies, then the GDP number will increase by a higher level.
This leads to the second question, which is that in this scenario it means that inflation actually came down as with 6.9% growth in real GDP and 13.6% in nominal GDP, inflation was 6.7% against 8% in 2012-13 (13.1% nominal GDP and 5.1% real GDP). Were we then off-track on monetary policy even though arguably these inflation numbers are closer to the GDP deflator rather than the CPI numbers?
At the operational level, the ministry’s paper on GDP revision does not give the same for various sectors and stops at the GVA level only. This will make it hard to forecast GDP as the net product taxes for various sectors have not been provided.
The ministry has loaded the statement with too much of data that it does become challenging to put them together. Much like what RBI has done for balance of payments, where the data is presented in both the new and old formats separately, the same should have been done here. This holds especially as the new series has a very different basket of goods and services, which, prima facie, looks hard to digest. Has our consumption basket changed radically or is it just that better reporting is taking place? If it is the latter which is what it appears to be then to maintain comparability we need to see how the earlier series would move with the old composition but new concept at market prices. Curiously, when the old series is looked at FY05 base year but at market prices, then the two growth numbers for GDP are 4.7 and 5% (as per the May 2014 press release). The new numbers are still way higher at 5.1 and 6.9%.
These numbers do not quite give comfort as they could be revised later and we could get different numbers. It would also be unwise to talk on the state of economy right now as all the analysis and judgements we have passed until January 29 based on the old series could be overturned when we get in the new core sector data, IIP and GDP numbers under the new criteria. It is also hard to reconcile this buoyant 6.9% number with the gloom in industry which includes the entire corporate space and SME segment which is still looking to see the economy recover. Further, it is hard to reconcile high real GDP growth with declining capital formation in both real and current prices. In fact, growth in government expenditure has been higher in both real and current terms which are the brightest spots in FY14. And to think that we said that the government is not spending by sticking to FRBM, now sounds incongruous.
The author is chief economist, CARE Ratings. Views are personal
The revision in data of any economic variable is necessary as the entire product and services baskets keep changing over time for an emerging economy. Therefore, the base years need to be revisited periodically and shifting the same to 2011-12 for GDP appears pragmatic. Aligning the concept to the globally accepted practice of reckoning the variable at market prices makes sense for comparison.
That said, the new series introduced by the ministry of statistics will take time to be absorbed as it has brought out a plethora of data to the table, leaving behind several questions in the minds of the readers. To begin with, the choice of the base year hangs in suspension as usually all base years are considered to be normal years. Here, the choice looked appropriate given that this year was the first one from whence there was a sharp decline in growth based on the old series. But the data put forth now, which starts really from FY13 and FY14, are so different that this premise can be questioned and we will never know whether this was the right choice.
The problem begins with the GDP growth rates under the new concept coming in at 5.1% and 6.9%, respectively, in FY13 and FY14, compared with 4.5% and 4.7% (at factor cost) under the old series. Normally, when base years change, there is always a change in growth rates, but we have never seen a turnaround in judgements due to a change in concept. The first strike is one of embarrassment, as whatever negative was spoken about the earlier political regime with euphemisms of a non-functional government with policy angina are cast aside as the economy was actually very dynamic and there was a V-shaped recovery in FY14 compared with stagnation which was a conclusion drawn from the old series data for FY14.
In fact, given the changes in the concept where we include net product taxes, one could look at just gross value added (GVA). Growth in GVA still comes to 4.9% and 6.6%, respectively, which means that taxes per se are not the reason for this difference and the economy was really growing. Or rather the new coverage has grown sharply. What, then, can account for this big change in GDP?
The sector-wise growth in GVA shows that everything that economist and analysts were saying was incorrect. Mining now has grown by 5.4% against minus 1.4% in the old series, manufacturing by 5.3 perfect as against minus 0.7%, and trade, repair and hotels by 13.3% against 1% earlier. These numbers are radical changes in the structure now presented. If these numbers reflect better coverage and are hence are more exhaustive, then we were wrong in saying that the mining irregularity affected growth and that industry was buffeted by absence of policy movement.
At the theoretical level, there are two questions. First, as the sizes of GDP at current prices under the old and new series are almost identical for 2013-14, it is hard to believe that when converted to real terms (both the concepts are at market prices), growth can increase sharply. The implication is that the real economy suddenly became buoyant with better coverage and reporting. Curiously, in this concept, if GVA grows by a stable number but net taxes rise sharply due to higher taxes or lower subsidies, then the GDP number will increase by a higher level.
This leads to the second question, which is that in this scenario it means that inflation actually came down as with 6.9% growth in real GDP and 13.6% in nominal GDP, inflation was 6.7% against 8% in 2012-13 (13.1% nominal GDP and 5.1% real GDP). Were we then off-track on monetary policy even though arguably these inflation numbers are closer to the GDP deflator rather than the CPI numbers?
At the operational level, the ministry’s paper on GDP revision does not give the same for various sectors and stops at the GVA level only. This will make it hard to forecast GDP as the net product taxes for various sectors have not been provided.
The ministry has loaded the statement with too much of data that it does become challenging to put them together. Much like what RBI has done for balance of payments, where the data is presented in both the new and old formats separately, the same should have been done here. This holds especially as the new series has a very different basket of goods and services, which, prima facie, looks hard to digest. Has our consumption basket changed radically or is it just that better reporting is taking place? If it is the latter which is what it appears to be then to maintain comparability we need to see how the earlier series would move with the old composition but new concept at market prices. Curiously, when the old series is looked at FY05 base year but at market prices, then the two growth numbers for GDP are 4.7 and 5% (as per the May 2014 press release). The new numbers are still way higher at 5.1 and 6.9%.
These numbers do not quite give comfort as they could be revised later and we could get different numbers. It would also be unwise to talk on the state of economy right now as all the analysis and judgements we have passed until January 29 based on the old series could be overturned when we get in the new core sector data, IIP and GDP numbers under the new criteria. It is also hard to reconcile this buoyant 6.9% number with the gloom in industry which includes the entire corporate space and SME segment which is still looking to see the economy recover. Further, it is hard to reconcile high real GDP growth with declining capital formation in both real and current prices. In fact, growth in government expenditure has been higher in both real and current terms which are the brightest spots in FY14. And to think that we said that the government is not spending by sticking to FRBM, now sounds incongruous.
The author is chief economist, CARE Ratings. Views are personal
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dude open only one thread so that every one can comment in one thread,if you create so many threads on the same topic,then each member will have a thread for himself.@by78
Editorial: Lies, damned lies, statistics | The Financial Express
All revisions of the base year cause the indices to change, and it has been well-documented that India’s GDP data does not capture large parts of the economy. Indeed, there has been a case for frequent base revision so as to capture the structural changes in the economy as well for incorporating more reliable as well as high-frequency data such as company filings to the authorities as well as tax payments data. This is what the new GDP data seeks to do, and to that extent, this is a job well done. But the data needs to be digested carefully, and perhaps needs to be revalidated since no change in base—from FY05, the base year has been changed to FY12—can cause the kind of change the latest numbers have thrown up. From another year of stagnation at a 4.7% GDP for FY14, the new series suddenly throws up a growth of 6.9%. If this were true, it is not clear why the voters were so blind they never saw the huge turnaround brought about by the Manmohan Singh government in its last year—voters, in fact, seem to have voted out UPA-II on the incorrect premise that it had brought the economy to its knees.
While it is good the data will now be comparable with international ones—no other country reports GDP series in the manner India does— it has to square up with other data as well. If the share of manufacturing has shot up 12.9% to 17.3%—and industry from 24.7% to 30.7%—this should have been accompanied by a sharp surge in jobs, not the kind of growth that has been seen over the last few years. Part of the jump has taken place due to the surge in mining, from minus 1.4% in the old series to 5.4% in the new one for FY14. The negative number squared with the ban on mining by various courts, the new one does not. Equally, it seemed possible to square the collapse in mining with the stagnation in sales of commercial vehicles; if mining has rallied in the manner it has, why didn’t CV sales pick up? And all production has to be financed, as does new investment—in this case, neither seems to have happened. Going by the new series of GDP data, industry did not grow by 0.4% but grew by 4.4%; similarly, gross capital formation actually rose 3% in FY14 according to the new series instead of falling 0.3% based on the old series. Yet, through all of this, bank credit grew only 15%, an oddity. Indeed, with the increased GDP numbers, the share of investments has fallen significantly, from 36% of GDP under the old series for FY14 to 33.4%; while the fall is worrying, the jump in GDP growth rate means the productivity of capital has jumped dramatically—there is really no explanation in the data for why this should have taken place, more so given all the problems with infrastructure bottlenecks, stuck projects and lack of coal and gas, etc. Nor is there any explanation for the complete U-turn in household savings—while conventional wisdom, of RBI and others, was that households were saving more in physical form (gold, etc) due to high inflation, the latest GDP data says “the decline (in the share of the household sector in total savings) can be attributed to the decline in household savings in physical assets”. The next time a base rate change is done, it would be a good idea to have detailed workshops explaining what has happened.
All revisions of the base year cause the indices to change, and it has been well-documented that India’s GDP data does not capture large parts of the economy. Indeed, there has been a case for frequent base revision so as to capture the structural changes in the economy as well for incorporating more reliable as well as high-frequency data such as company filings to the authorities as well as tax payments data. This is what the new GDP data seeks to do, and to that extent, this is a job well done. But the data needs to be digested carefully, and perhaps needs to be revalidated since no change in base—from FY05, the base year has been changed to FY12—can cause the kind of change the latest numbers have thrown up. From another year of stagnation at a 4.7% GDP for FY14, the new series suddenly throws up a growth of 6.9%. If this were true, it is not clear why the voters were so blind they never saw the huge turnaround brought about by the Manmohan Singh government in its last year—voters, in fact, seem to have voted out UPA-II on the incorrect premise that it had brought the economy to its knees.
While it is good the data will now be comparable with international ones—no other country reports GDP series in the manner India does— it has to square up with other data as well. If the share of manufacturing has shot up 12.9% to 17.3%—and industry from 24.7% to 30.7%—this should have been accompanied by a sharp surge in jobs, not the kind of growth that has been seen over the last few years. Part of the jump has taken place due to the surge in mining, from minus 1.4% in the old series to 5.4% in the new one for FY14. The negative number squared with the ban on mining by various courts, the new one does not. Equally, it seemed possible to square the collapse in mining with the stagnation in sales of commercial vehicles; if mining has rallied in the manner it has, why didn’t CV sales pick up? And all production has to be financed, as does new investment—in this case, neither seems to have happened. Going by the new series of GDP data, industry did not grow by 0.4% but grew by 4.4%; similarly, gross capital formation actually rose 3% in FY14 according to the new series instead of falling 0.3% based on the old series. Yet, through all of this, bank credit grew only 15%, an oddity. Indeed, with the increased GDP numbers, the share of investments has fallen significantly, from 36% of GDP under the old series for FY14 to 33.4%; while the fall is worrying, the jump in GDP growth rate means the productivity of capital has jumped dramatically—there is really no explanation in the data for why this should have taken place, more so given all the problems with infrastructure bottlenecks, stuck projects and lack of coal and gas, etc. Nor is there any explanation for the complete U-turn in household savings—while conventional wisdom, of RBI and others, was that households were saving more in physical form (gold, etc) due to high inflation, the latest GDP data says “the decline (in the share of the household sector in total savings) can be attributed to the decline in household savings in physical assets”. The next time a base rate change is done, it would be a good idea to have detailed workshops explaining what has happened.
India Grew 6.9% Last Year. But No One's Sure What That Means - Bloomberg Business
India changed its GDP calculations and caught everyone by surprise on Friday evening, with the revisions suggesting Asia's third-largest economy is in much better shape than we thought it was. Or is it?
Subdued expansion was at the heart of Prime Minister Narendra Modi's election win last May, when he promised to jumpstart growth from a near decade-low.
Now we're told the economy wasn't actually sputtering along at 4.7 percent last fiscal year through March 2014; instead, it was surging 6.9 percent. The revision takes India closer to China's 7.4 percent, the fastest-growing major economy in the world, but without a breakdown to show how. The input data for these numbers isn't available beyond a few years, so even though the government has promised more details by the end of February, we probably could be left with incomparable figures.
While a part of the new method -- using prices from purchasers rather than producers -- brings the Indian data in line with the International Monetary Fund and global counterparts, economists appear divided:
HSBC Holdings Plc's Pranjul Bhandari and UBS Group's Ed Teather lament the lack of historical numbers, while Morgan Stanley's Chetan Ahya questions the quality of the data. DBS Bank's Radhika Rao and Capital Economics's Shilan Shah say the revisions appear out of sync with other indicators such as factory output. Goldman Sachs, on the other hand, says the new dataset's manufacturing boost was a needed correction.
The consequences of the inability to accurately chart a trend could be immediate. The central bank, which left rates unchanged Tuesday, had forecast growth of 5.5 percent for the current fiscal year. Based on that, it had predicted inflation will stay below-target until January 2016.
Now, no one's sure. "GDP revised up or down?'' Citigroup Inc. economist Rohini Malkani wrote in a report today. "Depends on how one looks at it."
India changed its GDP calculations and caught everyone by surprise on Friday evening, with the revisions suggesting Asia's third-largest economy is in much better shape than we thought it was. Or is it?
Subdued expansion was at the heart of Prime Minister Narendra Modi's election win last May, when he promised to jumpstart growth from a near decade-low.
Now we're told the economy wasn't actually sputtering along at 4.7 percent last fiscal year through March 2014; instead, it was surging 6.9 percent. The revision takes India closer to China's 7.4 percent, the fastest-growing major economy in the world, but without a breakdown to show how. The input data for these numbers isn't available beyond a few years, so even though the government has promised more details by the end of February, we probably could be left with incomparable figures.
- QuickTake: India’s Aspirations
While a part of the new method -- using prices from purchasers rather than producers -- brings the Indian data in line with the International Monetary Fund and global counterparts, economists appear divided:
HSBC Holdings Plc's Pranjul Bhandari and UBS Group's Ed Teather lament the lack of historical numbers, while Morgan Stanley's Chetan Ahya questions the quality of the data. DBS Bank's Radhika Rao and Capital Economics's Shilan Shah say the revisions appear out of sync with other indicators such as factory output. Goldman Sachs, on the other hand, says the new dataset's manufacturing boost was a needed correction.
The consequences of the inability to accurately chart a trend could be immediate. The central bank, which left rates unchanged Tuesday, had forecast growth of 5.5 percent for the current fiscal year. Based on that, it had predicted inflation will stay below-target until January 2016.
Now, no one's sure. "GDP revised up or down?'' Citigroup Inc. economist Rohini Malkani wrote in a report today. "Depends on how one looks at it."
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