Latest Indian GDP data is FAKE. Heres why

[Eminent Mainstream Media]

The article seems to have been written by a tabloid journalist and not an economist. Otherwise he/she wouldn't have beaten around the bush and attacked the very fundamentals of what comprises a GDP.

The GDP equation is :

Let's have some data for each of these buckets before we can comment !

Now fudging GDP data is technically not impossible since china has done it in the past but its imperative to have an educated discussion and not at the level where the original article is written.


E.g. One point in op is exports are reducing so GDP couldn't have grown. That is patently idiotic on his/her part to say so. It's the net exports which matters. ie. X-M value ie the net outflow as we can see from the last bucket.

Going by the formula-

C is not upto the mark- Hence reduction in interest rates- may be reduced further-
I is very good-
G is very good-
X-M is very good probably lowest in 5 years-

Main Indian imports were Coal and Oil- Now local coal blocks have been auctioned and mining will further reduce imports- Oil prices have dropped and will continue to drop- Gold which is another important import have less demand and price is also low- By 2017 import of coal will be limited to coastal thermal plants-

Export has also reduced as main export was petroleum by-product- whose prices have dropped due to drop in oil prices-

Any data on import volume and consumer spending

50% of Indian import has been coal and oil in recent years- also Gold makes significant portion of imports in $$$-

 

[RisingShiningSuperpower]

As we all know yesterday India released its new GDP data. I was surprised at the 7.4% growth which it reported. It is impossible that India is growing at this rate when the world is slowing down. Here are 11 reasons why the number is fake:

1) Exports have been falling eleven months in a row. In fact, between April and October 2015, exports have fallen by 17.6% to $154.29 billion, in comparison to the same period last year. Between April and October 2014, the exports had stood at $187.29 billion. A greater than 7% economic growth rate with falling exports is a little difficult to believe.

2) Corporate profitability continues to remain subdued. As a recent news-report in the Business Standard points out regarding the profitability for the period July to September 2015: “It was another muted quarter for India Inc, with aggregate profit growth at both the operating and net level growing at only under one per cent over a year-ago period. The sample is of 2,300 companies…The numbers are worse for the benchmark indices such as the Nifty, where operating and net profit are down between three-five per cent over the year-ago quarter, with aggregate numbers below expectations.”

3) Passenger vehicles sales, another good measure of economic recovery, have been subdued through most of this financial year, though there has been some recovery in October 2015, which doesn’t come under the July to September 2015 period, for which the economic growth number has been reported. Between September 2015 and September 2014, passenger vehicles sales went up by only 3.85%.

4) Motorcycle sales, a very good economic indicator in the Indian context, have fallen for most of the financial year, only to have recovered a little in October due to festival season sales. It remains to be seen whether the sales can be sustained for November 2015. Data from the Society of Indian Automobile Manufacturers (Siam) points out that motorcycle sales during the first six months of the year (April to September 2015) were down by 4.06% to 5.36 million units, in comparison to the same period last year.

5) Tractor sales have been falling for thirteen months in a row. Data from the Tractor Manufacturers Association shows that sales have fallen by 20% during the first six months of this financial year (i.e. April to September 2015). This is a clear example of weak agricultural growth.

6) The loan growth of banks continues to remain subdued. The sectoral deployment of credit data released by the Reserve Bank of India (RBI) shows that bank loans grew by 8.4% between September 2014 and September 2015. In fact, they grew by an even slower 8.1% between October 2014 and October 2015.

7) Along with this, the bad loans of banks continue to pile up. As a recent report in The Indian Express points out: “Already burdened by bad loans, 37 banks, led by public sector ones, have reported a 26.8 per cent rise in non-performing assets (NPAs) over the 12-month period ending September this year.”

The overall non-performing assets of banks as of September 2015 stood at Rs 3,36,685 crore. This was an increase of Rs 71,000 crore, according to numbers put together by credit rating firm CARE.

8) The number of stalled industrial projects went up during the period July to September 2015. As a recent research note by Morgan Stanley points out: “The stock of stalled projects climbed in the September quarter, while existing capacity is being underutilized. This has, not surprisingly, lowered interest in greenfield investments, with industrial credit loan growth stagnating in single-digits.” The bulk of the stalled projects belong to the manufacturing and infrastructure sectors. Further, there is a good anecdotal evidence to suggest that small and medium enterprises, a major source of job growth, continue to struggle.

9) The Reserve Bank of India governor Raghuram Rajan recently pointed out that factories were running 30% below capacity as of now. A research report by DBS points out that the capacity utilisation rate was at 80% in 2011-2012. This suggests a significant slack in the economy. How is manufacturing then growing by 9%, as suggested by the data released by the ministry of statistics and programme implementation?

10) The real estate sector, a major employer of people, continues to be in the doldrums, with new launches coming down and the number of unsold homes going up.

11) Further, for two years in a row India has had a deficient monsoon. In its end of season report, the India Meteorological Department (IMD), the nation’s weather forecaster, stated that “rainfall over the country as a whole was 86% of its long period average (LPA). Thus years 2014 & 2015 was the fourth case of two consecutive all India deficient monsoon years during the last 115 years.”

Indian GDP is calculated using Vedic statistics, not the inferior methods they use in the West. It's obvious you are jealous of India's achievements.

 

[Indika]

In big and developing economies it is very easy to fudge data. It will serve them well on short term so i would say Modi is smart at least for short term. Dar played the same game last year but obviously he needs to take lesson regarding how to make make investors dance around the tune.

if pakistan had aaaaaan economy similar size of india & reputation they could have done that and get away with it.
But alas its not the case. Big boys like india/china get away with bad data bcos it will even out when economy grows well next term. But begging bowls have no such choice.

Rumor (again it is rumor) is rife that pakistan economy grew by 10% due to 1000% increase in burnol sales.

 

[banvanaxl]

Indian GDP is calculated using Vedic statistics, not the inferior methods they use in the West. It's obvious you are jealous of India's achievements.

Latest news coming in -

Mr Modi. in his quest to make India a rising, successful and economic superpower like Pakistan is going to visit Lal Masjid in Islamabad to learn the intricacies of the delicate science of madrassah mathematics and statistics, reportedly responsible for the meteoric rise of Pakistan.
There he will attend lectures by a certain Gernail Sahab and by the venerable Abdul Aziz Ghazi himself.

The visit is sponsored by INC ex-MP, Mani Shankar Aiyar's Think Tank and Welfare Foundation.

 

[fsayed]

Spare capacity affects GDP growth? Using spare capacity is like the easiest way to get growth moron.....no major capex required.

From the BBC:

India's economic growth picks up to 7.4% - BBC News

No mention of the data being "suspicious" "fake" or dubious.

Butthurt trolls are butthurt.

What bollocks.. First the title of the thread is doctored.

11 reasons why India growing at 7.4% is simply not believable - Firstpost

The growth on GDP was due to the following factors:

1. Agriculture Sector - The agriculture sector grew at 2.2 per cent, higher than the 2.1 per cent growth witnessed in the corresponding quarter last year and significantly higher than 1.9 per cent growth seen in the quarter ended June 2015.

2. Manufacturing Growth - Manufacturing grew at 9.3 per cent as against 7.9 per cent seen in Q2’15

3. Trade, Communication and Services - The trade, hotel, transport, communication & services related to broadcasting grew at 10.6 per cent as against 8.9 per cent in the same quarter last year.

4. Financial, insurance and real estate segment grew by 9.7 per cent during the quarter.


* “The index of industrial production has been growing over the last few months and there has been a rise in urban demand which has led to a rise in manufacturing growth. The automobile sector and the consumer durable sectors have witnessed growth. Rural growth, however, remains a concern,” said DK Joshi, chief economist at Crisil.

**While RBI has cut the interest rate by 125 basis point in this calendar year, experts say that the benefits of rate cut have not kicked-in yet and it takes roughly 3-4 quarters for that.

Manufacturing growth at 25-month low in November - Nikkei/Markit PMI

 

[Chinese-Dragon]

Economic growth is not related to exports alone. Unlike China and many other countries which are export driven. We have a strong and robest internal economy.

How is China "export driven"?

According to the latest figures from the World Bank, exports only make up 22% of China's GDP, whereas exports make up 23.6% of India's GDP.

Exports of goods and services (% of GDP) | Data | Table - World Bank

Our exports seem like a lot because our overall GDP is large (around $11 trillion), but the vast majority of economic activity in China is domestic.

 

[fsayed]

Core sector growth slows to 3.2% in October | Business Standard Mobile Website

Debashis Basu: Why financial schemes are struggling | AMuskeeter

 

[Pandora]

if pakistan had aaaaaan economy similar size of india & reputation they could have done that and get away with it.
But alas its not the case. Big boys like india/china get away with bad data bcos it will even out when economy grows well next term. But begging bowls have no such choice.

Rumor (again it is rumor) is rife that pakistan economy grew by 10% due to 1000% increase in burnol sales.

I dont know about you fudged data but your seems to be growing as big as you *** so it is hard to tell difference where you were speaking from.

Just for info India gets as much aid as Pakistan and in recent years it has been more than Pakistan so looks like you people are even bigger beggars than us.
Net official development assistance and official aid received (current US$) | Data | Table

Do compare the data and slap your face or A$$ where ever you speak from

Aid in 2013

India: 2.4 billion $
Pakistan : 2 Billion $

 

[zebra7]

You don't have brains to debate with him?

No I don't have brain thats why I tagged you here, so that you could debate with him, on this topic after all this is the time you show your Patriotism.

 

[Indian Patriot]

No I don't have brain thats why I tagged you here, so that you could debate with him, on this topic after all this is the time you show your Patriotism.

Why do I have to show my patriotism to a retard like you, in your own words you don't have a brain.

 

[zebra7]

Why do I have to show my patriotism to a retard like you, in your own words you don't have a brain.

don't show me, but show all people in PDF, after all you have the Brain

 

[General General]

6.9% growth? World laughing at this bad joke
Former central bank governor Dr Y V Reddy once quipped to me that while the future is always uncertain, in India even the past is uncertain, given how often the government revises economic data. Even by that standard, however, the dramatic upward revision of the GDP growth rate is a bad joke, smashing India’s credibility and making its statistics bureau a laughing stock in global financial circles.

The new and not-so-funny numbers show that the Indian economy grew at a pace of 6.9% in the last fiscal year, a claim that is fantastic in the extreme. Many Indian economists have set out to show that the new growth numbers for the economy as a whole simply don’t add up, as a sum of the parts. Every piece of data — from the tepid increase in corporate revenues to imports, credit, rail freight and auto sales — points to a much lower growth figure, probably closer to the old estimate of 5%.

Surprisingly, for a country obsessed with its GDP growth rate, there is not much outrage at this travesty, either in public or at cocktail parties. In the past, India’s habit of revising economic data was confined to relatively minor tweaks, but this latest update is a wholesale rewriting of history. In the international financial community, no one had questioned the veracity of India’s economic numbers, until now.

This makes India look bad even compared to China, which many analysts have long suspected of massaging GDP figures to show steady growth. But the same sceptical analysts admit that when China manipulates its numbers, it does so carefully and only when the actual growth rate falls below its official target, as it has of late. The authorities seem to know exactly what they are doing. India’s new GDP data clashes even with the pronouncements of some government and central bank officials, suggesting that the left arm doesn’t seem to know what the right arm is doing.

The whole episode is reinforcing the bad rap India gets for poor governance standards. To be sure, many emerging nations including Turkey and Nigeria have issued flattering upward revisions of their growth data in recent years, but generally without eliciting peals of laughter. Last year, Nigeria issued a revision showing that the economy was nearly twice as large as previously reported, but it was widely accepted because the new methodology was well explained and had the endorsement of the International Monetary Fund.

The IMF in fact recommends that, every five years, countries update the base year they use to calculate the pace of growth in the economy. The idea is to capture the impact of new growing industries, and Nigeria hadn’t updated its base year since 1990. India’s last revision came in 2010, so this one came on schedule. Only the statistics bureau clearly rushed it into print, without conducting even an elementary ‘smell test’ to ensure that the new numbers square with the reality on ground. One clear sign of the bureau’s haste to publish is the fact that it released revised data for only the last two years, making it impossible to see the long-term trend for India’s growth rate.

Nobody really believes that the Indian economy grew at anywhere close to 7% last year, and shockingly no one is willing to put an end to this nonsense. When India delivers its budget on February 28, officials are likely to claim that economic growth in the coming year will accelerate to around 8% — a figure based on the new series. A forecast based on dodgy numbers will only cast doubt on India’s claim to be the world’s fastest-growing large emerging market, though that claim could easily prove true in a couple of years, based on credible numbers.

At a time when the world economy has slowed to a pace of just 2.5%, close to the level that feels like a global recession, many analysts cite India as one of the few economies in which the growth outlook could brighten. If India’s growth rate accelerates, legitimately, from the current rate of around 5% to a rate of 6 to 7%, it will be widely hailed as a remarkable achievement, particularly when most emerging nations including China are slowing down sharply. Instead, serious analysts are left scratching their heads over the statistics department’s new data, and every story about India’s economy now includes at least a jarring footnote about its not-so-funny numbers. The government needs to resist the temptation to celebrate India’s economic success, based on this dubious data. The better part of political and economic wisdom would be to say that until more details are available, and until the new data meets more global standards, the government will continue to use the old series. Good governance is based on credibility, not a willing suspension of disbelief.

Since most here are calling the author of OP article "amateur", here is an interesting piece by an Indian professional.
Author: Ruchir Sharma- He is head of emerging markets at Morgan Stanley Investment Management.
6.9% growth? World laughing at this bad joke - TOI Blogs

 

[Kyusuibu Honbu]

Latest news coming in -

Mr Modi. in his quest to make India a rising, successful and economic superpower like Pakistan is going to visit Lal Masjid in Islamabad to learn the intricacies of the delicate science of madrassah mathematics and statistics, reportedly responsible for the meteoric rise of Pakistan.
There he will attend lectures by a certain Gernail Sahab and by the venerable Abdul Aziz Ghazi himself.

The visit is sponsored by INC ex-MP, Mani Shankar Aiyar's Think Tank and Welfare Foundation.

He is Chinese

 

[Indian Patriot]

don't show me, but show all people in PDF, after all you have the Brain

get a brain first loser, don't troll here and don't tag me in your troll posts.

 

[zebra7]

get a brain first loser, don't troll here and don't tag me in your troll posts.

Could you explain me how is it a troll post, I am asking my countrymen who have better Brain to counter enemy Patriot.