India's GDP Data Overstated: Morgan Stanley's Ruchir Sharma

[shah1398]

India's GDP Data Overstated: Morgan Stanley's Ruchir Sharma
Press Trust of India | Last Updated: July 03, 2016 17:57 (IST)

Economy[/paste:font]

New Delhi: Terming India's GDP number "overstated", Morgan Stanley chief global strategist Ruchir Sharma has called for more private investment for the economy to get back on track.

"I think India's GDP data is overstated," Mr Sharma told PTI.

Indian economy grew 7.9 per cent in the fourth quarter of 2015-16, taking the overall GDP expansion to a 5-year high of 7.6 per cent for the fiscal year.

Mr Sharma seemed fine with the overall investment in India, but "it has largely been supported by the government".

"The private sector investment is still not picking up in India," he noted, linking low sustainable inflation to "very high" level of investment.

The Reserve Bank of India's decision to bring inflation to 5 per cent this year, he said, is in line with emerging market economies' average.

"If you look at all successful economies of the world... China, Korea, Taiwan all grew very rapidly when their inflation rates were low."

"There is no economy which does well with high inflation rates. So, you know all miracle economies. In these countries, inflation rates were below emerging market economies' average," Mr Sharma noted.

Referring to Prime Minister Narendra Modi's Make in India initiative, Mr Sharma underscored the importance of market share gains because China is "low on exports and becoming more expensive, their wages have gone up a lot and countries that are benefiting are Vietnam, Bangladesh and Cambodia".

In the same breath, Mr Sharma cautioned that "we should keep our expectations in check".

"I have always said about India, this is a country which always disappoints the optimist and pessimist," he added.

According to Mr Sharma, higher FDI flows into India is "a very positive story".

http://profit.ndtv.com/news/economy...estment-morgan-stanleys-ruchir-sharma-1427498

 

[rcrmj]

only if you had been to India, stay there for few weeks and see their people's daily life, you'd know their economy is a hoax, there is no sustainability about that

 

[cloud4000]

GDP is the most quoted economic indicator there is and the most overrated. A country's GDP can go up if the government borrows more money.

 

[Nilgiri]

GDP is the most quoted economic indicator there is and the most overrated. A country's GDP can go up if the government borrows more money.

True. Worse yet is nominal GDP....as though everyone consumes goods locally by paying in US dollars at US price levels

 

[Crixus]

MOrgan Stanley is sinking ship .... check their last quater results ... now firing people like anything let then judge their GDP first then comment on INdia.

 

[Mrc]

i am astonished

 

[DJ_Viper]

India's GDP Data Overstated: Morgan Stanley's Ruchir Sharma

I don't understand how this is a "new" news? This has been in news for a long time. India reports IT salaries sent to them for offshore work as "FDI". This isn't really "the FDI" the rest of the world is used to.

But it balloons up (inflates) the Indian-FDI numbers by a large margin. I think this is just to compete against China as it makes their own homemade "FDI" definition and associated numbers look much bigger (the largest in the world). But the definition and calculation of the term FDI is inaccurate. But hey, its their country and they can have it the way they like it.

 

[DesiGuy1403]

India reports IT salaries sent to them for offshore work as "FDI". This isn't really "the FDI" the rest of the world is used to.

Care to back up that claim?

 

[raj76]

https://www.facebook.com/video.php?v=693475827456976

LOL

 

[DJ_Viper]

Care to back up that claim?

I didn't "make a claim". I told you what I've heard from top economists and have read it myself. In fact, I think I've read it on this forum also, somewhere. The topic of this thread we are on, is ALSO saying something similar to my post.

You can google also. Its your right as a human. Thanks.

 

[Nilgiri]

I didn't "make a claim". I told you what I've heard from top economists and have read it myself. In fact, I think I've read it on this forum also, somewhere. The topic of this thread we are on, is ALSO saying something similar to my post.

You can google also. Its your right as a human. Thanks.

I suggest you look at the IMF metadata and methodology that India follows.

India generally follows a very restrictive, conventional definition of FDI compared to many other Emerging markets. It certainly doesn't include "IT salaries". That is a remittance if anything, it would get reflected in the Balance of Payments (specifically the Current Account), but not be included as FDI (which is part of the capital account).

I would like the names of these top economists you mention and their articles. You may be confusing some terms here.

You may want to read how FDI is measured here:

https://www.imf.org/external/np/sta/fdi/eng/2003/102803.pdf

 

[Mangus Ortus Novem]

Disappointing if true.

 

[SBUS-CXK]

Economic aggregate is not important, the per capita GDP is the decisive factor. This is the fundamental reason why China is still in the developing world.

 

[Kyusuibu Honbu]

only if you had been to India, stay there for few weeks and see their people's daily life, you'd know their economy is a hoax, there is no sustainability about that

Maybe that is how Chinese Govt calculates its GDP i.e by monitoring its citizens daily lives over a period of few weeks

Rest of the planet however chooses to calculate GDP based either Production/Expenditure/Income.

http://www.imf.org/external/pubs/ft/fandd/basics/gdp.htm

Theoretically, GDP can be viewed in three different ways:

● The production approach sums the “value-added” at each stage of production, where value-added is defined as total sales less the value of intermediate inputs into the production process. For example, flour would be an intermediate input and bread the final product; or an architect’s services would be an intermediate input and the building the final product.

● The expenditure approach adds up the value of purchases made by final users—for example, the consumption of food, televisions, and medical services by households; the investments in machinery by companies; and the purchases of goods and services by the government and foreigners.

● The income approach sums the incomes generated by production—for example, the compensation employees receive and the operating surplus of companies (roughly sales less costs).

 

[faithfulguy]

only if you had been to India, stay there for few weeks and see their people's daily life, you'd know their economy is a hoax, there is no sustainability about that

True. But for a country that made movies about becoming a superpower, fake GDP numbers fit into the bragging narrative.