India's strong GDP data leaves economists scratching their heads

[PaklovesTurkiye]

Atleast we have something to claim but there are some countries who have nothing to claim except hatred by all neighbouring countries and there only friend in whole world is China who will loot them with economic corridor

 

[Nilgiri]

Very interesting, As claims by that economist the number of projects in the informal sector that may have been accounted in to the formal sector due to demonetization and tax reforms, Hence the high figures than expect in the GDP, even though manufacturing and services does not show correlating growth on the ground or the negative impact of demonetization

Yah the basic argument seems to be that the impact on formal sector will be delayed over time (impulse loading over time rather than one quarter). Formal sector is what GVA/GDP measures. It is mitigated by a larger portion of the informal sector coming into the formal sector as well (esp immediate higher tax collection etc). Worth noting its (GDP quarter growth) has also been helped by better than expected manufacturing, mining, agriculture and couple other sector growth figures....the details of which have to be further analysed.....given GVA is non-biased towards things like inventory stocking (as opposed to discriminating towards sales which many indices of activity prefer). i.e many companies couldnt sell as much but they simply kept their goods in inventory and given GVA is production side rather than consumption side, it gets registered in the growth...and the difference between the number and the feeling on the ground is the buffer between this (inventories). Other such factors are there too....needs time to analyse again.

People often forget that the GVA/GDP never measures the informal sector, but the Indian economy is an interesting mixing of the two.

Informal sector, there is no accurate measure of its size, it is effectively an unknown and thats where most of the impact will be felt. As Rumsfeld put it in his classification, it is a known unknown....compared to GDP which would be a known known. There are probably unknown unknowns, but that is beyond the realm of economics I would say.

How transient/permanent it is plus how people balance it with the long term benefits they expect will be seen only in final consumption numbers, final price levels of essential goods and intermediaries for the fiscal year (and maybe next one too) and also election results.

Guess we'll have to wait and see.

 

[H!TchHiker]

CREDIBILITY

The strong data have also reignited the debate about the credibility as well as the quality of the official GDP data.

Ever since India changed its methodology to measure economic activity two years back, which transformed a sluggish economy into the world's fastest-growing major economy overnight, private economists have been struggling to square it with the not so rosy reality on the ground.

The latest data has only added to the confusion.

For example, the official figures show economic growth was primarily driven by consumer spending, offsetting a fall in government expenditure. However, this is not backed up by the earnings of consumer goods firms in the last quarter.

As cash-strapped households turned wary, sales of various goods from beverages to domestic appliances to cars all plunged. The lacklustre consumer spending prompted several companies to trim their revenue outlook.

Consumer confidence also fell sharply, with households uncertain about their income, employment and spending capability, according to an RBI survey published this month.

"There are widespread doubts about the accuracy of the national accounts numbers," analysts at Capital Economics wrote. "The unexpected strength of today's data will do nothing to allay these concerns."

http://www.businesstoday.in/current...ists-scratching-their-heads/story/247183.html

Well there are some questions :
1) India did revise its measurement methodology 2 years back ..So did they revised there growth figures too retrospectively ?

2) Did they submit the new numbers based on which the previous GDP was revised ? If so kindly mentioned the source ..Since the revision of Old GDP lays down the foundation of future GDP estimation growth..
This is not to make Pak Vs india kindly reply it on purely economic basis..

 

[wiseone2]

Well there are some questions :
1) India did revise its measurement methodology 2 years back ..So did they revised there growth figures too retrospectively ?

2) Did they submit the new numbers based on which the previous GDP was revised ? If so kindly mentioned the source ..Since the revision of Old GDP lays down the foundation of future GDP estimation growth..
This is not to make Pak Vs india kindly reply it on purely economic basis..

Modi's demonetization has moved some of economic activity in the informal sector to the formal sector

 

[H!TchHiker]

Modi's demonetization has moved some of economic activity in the informal sector to the formal sector

I agree but i asked something else ..Kindly read my question

 

[wiseone2]

I agree but i asked something else ..Kindly read my question

https://www.wsj.com/articles/india-changes-gdp-calculation-method-1422622762

If the old data is revised it does impact the new data. It might not get the media headlines. Numbers get revised all the time

 

[H!TchHiker]

https://www.wsj.com/articles/india-changes-gdp-calculation-method-1422622762

If the old data is revised it does impact the new data. It might not get the media headlines. Numbers get revised all the time

Yes but numbers were not revealed based on which the GDP % revised..This was my question....It makes headline if numbers are revealed...

 

[wiseone2]

Yes but numbers were not revealed based on which the GDP % revised..This was my question....It makes headline if numbers are revealed...

you have to read the reports. I do not follow the Indian economy. I try to read the American Federal Reserve Bank reports.

 

[H!TchHiker]

you have to read the reports. I do not follow the Indian economy. I try to read the American Federal Reserve Bank reports.

I read the reports and did try to find out the numbers but unable to retrieve as it seems numbers were not issued..That is why asked indian members if anybody can counter my claim or some local media/newspaper might have issued it..
This is called number games and playing with it...

 

[wiseone2]

I read the reports and did try to find out the numbers but unable to retrieve as it seems numbers were not issued..That is why asked indian members if anybody can counter my claim or some local media/newspaper might have issued it..
This is called number games and playing with it...

The informal sector in India makes any measurement of GDP a challenge

 

[H!TchHiker]

The informal sector in India makes any measurement of GDP a challenge

Yes but even if formal one become question then people should ask question..Government does this to gain political mileage..in most of the places

 

[wiseone2]

Yes but even if formal one become question then people should ask question..Government does this to gain political mileage..in most of the places

In India there is little fudging of the data. If you inflate the data for the current time period your future growth is reduced.

Most Indians could care less about GDP growth rate. They care more about price of onions