India's growth accelerates to 7.9 pc

[Quibbler]

NEW DELHI: India's GDP growth accelerated to 7.9 per cent in the three months through March from a revised 7.2 per cent in the previous quarter, government data showed on Tuesday.

Analysts polled by Reuters had forecast annual growth of 7.5 per cent in the quarter.

For the 2015-16 fiscal year ending in March, growth came in at 7.6 per cent, in line with the official estimate. Growth was 7.2 per cent in 2014-15.

Devendra Kumar Pant, Chief Economist, India ratings and research
"Agriculture, no doubt, will have some positive impact from the third quarter onward. Agriculture will be driving it on the expectation of better rainfall after two consecutive years of subpar monsoon. That will revive demand both in industry as well as services.

"The consumption story is there because despite two consecutive subpar monsoons and rural demand not growing we are seeing some growth, but right now the problem more is of investment.

"We all believe investment demand is going to revive quickly, but it will not revive very soon. Until and unless investment story evolves, the stability to growth will be a challenge." Shubhada Rao, Chief Economist, Yes Bank "Momentum is building up faster than anticipated, and there is demand pickup in the horizon. This definitely spells out a positive story that there will soon be a recovery in private sector capex."

 

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HomeIndiaIndia-News-India
RBI Governor Raghuram Rajan sceptical about GDP calculation
Value addition to the GDP is important when people move into newer areas of work: RBI Guv.
BY: ENS ECONOMIC BUREAU | MUMBAI |
PUBLISHED ON:JANUARY 29, 2016 1:16 AM
Reserve Bank Governor Raghuram Rajan on Thursday raised a question mark over the way gross domestic product (GDP) is calculated in the country stating that “we get growth because people (are) moving into different areas”.
Value addition to the GDP is important when people move into newer areas of work rather than just a rise in the growth numbers, Rajan said while asserting the need to be careful in counting GDP numbers. Industry experts and economists had in the past expressed skepticism over the calculation of GDP numbers according to the new methodology.
“So, in that sense we have to be a little careful about how we count GDP because some time we get growth because people (are) moving into different areas. It is important that when they move into different areas they are actually doing something which is more value added,” Rajan said.

Speaking at the 13th convocation ceremony of the Indira Gandhi Institute of Development Research in Mumbai, the RBI Governor gave an example of two neighbouring mothers who babysit each other’s child and get paid an equal salary. He said both the mothers getting paid a salary will be an addition to the GDP but may not be an exact reflection of an economic growth.
“If mother A went to look after the children of mother B and mother B went to look after the children of mother A, and they each paid each other an equal amount, GDP would go up by the sum of the two salaries. But would the economy be better off? Presumably, kids want their own mother rather than the neighbouring mother. And the economy would be worse off,” Rajan observed.
According to the government’s mid-year economic review, the economy is now expected to grow at 7-7.5 per cent in the fiscal year ending March 2016, down from an estimate of 8.1-8.5 per cent announced in the Budget in February. In January 2015, the government led by Prime Minister Narendra Modi changed the base year for computing national accounts which pushed up the economic growth rate for 2013-14 to 6.9 per cent, while earlier estimate on the basis of old series was 4.7 per cent. These changes follow a revision in the base for calculating national accounts to 2011-12 from 2004-05.
Pranab Bardhan, a professor at the University of California, Berkeley, who was the guest of honour at the event raised the point on the possibility of restructuring the current system of capital subsidies to wage subsidies through which the business sector could be actively involved in worker training programmes as well as identifying good workers. Supporting the issue, Rajan stated there is a need for incentivising employment rather than providing subisidies on capital. “Apart from direct tax benefits for investment, we also give subvention on loans in many situations which subsidises capital. We may not do similar things for labour. Clearly, trying to incentivise the employment which will add skills to labour is extremely important,” Rajan added.

https://twitter.com/x/status/737686361428238337

 

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HomeIndiaIndia-News-India
RBI Governor Raghuram Rajan sceptical about GDP calculation
Value addition to the GDP is important when people move into newer areas of work: RBI Guv.
BY: ENS ECONOMIC BUREAU | MUMBAI |
PUBLISHED ON:JANUARY 29, 2016 1:16 AM
Reserve Bank Governor Raghuram Rajan on Thursday raised a question mark over the way gross domestic product (GDP) is calculated in the country stating that “we get growth because people (are) moving into different areas”.
Value addition to the GDP is important when people move into newer areas of work rather than just a rise in the growth numbers, Rajan said while asserting the need to be careful in counting GDP numbers. Industry experts and economists had in the past expressed skepticism over the calculation of GDP numbers according to the new methodology.
“So, in that sense we have to be a little careful about how we count GDP because some time we get growth because people (are) moving into different areas. It is important that when they move into different areas they are actually doing something which is more value added,” Rajan said.

Speaking at the 13th convocation ceremony of the Indira Gandhi Institute of Development Research in Mumbai, the RBI Governor gave an example of two neighbouring mothers who babysit each other’s child and get paid an equal salary. He said both the mothers getting paid a salary will be an addition to the GDP but may not be an exact reflection of an economic growth.
“If mother A went to look after the children of mother B and mother B went to look after the children of mother A, and they each paid each other an equal amount, GDP would go up by the sum of the two salaries. But would the economy be better off? Presumably, kids want their own mother rather than the neighbouring mother. And the economy would be worse off,” Rajan observed.
According to the government’s mid-year economic review, the economy is now expected to grow at 7-7.5 per cent in the fiscal year ending March 2016, down from an estimate of 8.1-8.5 per cent announced in the Budget in February. In January 2015, the government led by Prime Minister Narendra Modi changed the base year for computing national accounts which pushed up the economic growth rate for 2013-14 to 6.9 per cent, while earlier estimate on the basis of old series was 4.7 per cent. These changes follow a revision in the base for calculating national accounts to 2011-12 from 2004-05.
Pranab Bardhan, a professor at the University of California, Berkeley, who was the guest of honour at the event raised the point on the possibility of restructuring the current system of capital subsidies to wage subsidies through which the business sector could be actively involved in worker training programmes as well as identifying good workers. Supporting the issue, Rajan stated there is a need for incentivising employment rather than providing subisidies on capital. “Apart from direct tax benefits for investment, we also give subvention on loans in many situations which subsidises capital. We may not do similar things for labour. Clearly, trying to incentivise the employment which will add skills to labour is extremely important,” Rajan added.

https://twitter.com/x/status/737686361428238337

Well the fact is one may accept the 7.9 figure or 5% figure, using different methods, but India is the fastest growing economy today.

 

[Sky lord]

This is quite an achievement especially considering most of the world is still growing very slowly.

 

[Laozi]

Now India Needs:

2-3 Good Monsoons

NDA Majority in Rajya Sabha

No Strategic or Tactical weapon attacks

Then Expect the Growth Rate in Double Digits