Dude, what kind of an idi0t are you ?? you do understand that being ONLY on my 20th post I cannot post links in my rebuttals and even if i did what difference would it make ??
When did i state that this is MY PROPRIETARY article ?? - are you out of your mind ?
I understand the shock you have just recieved from a "20 message DUDE" but do you really think I have time to sit up and type verbatim in my own words when i can simply relay what I'm trying to say by sharing information available on the net from media sources in a chat forum ??
This is a chat forum, not my Job where i will sit and write out each word for your perusal. The main intention is to reply to your post and not have an evaluation done by you, on how i record my responses online !
When i have to put my words into writing at a probable forum then i will go through the effort otherwise, much like everything else online we do rely on quoting and sharing information. Whats so different about that ??
Are you here to discuss India's GDP fudging or my ability to produce economic literature ??
Now getting back to the topic. Many factors are different from the cost factor approach :
1. GVA calculated at cost factor approach used production cost or prices paid for products recieved by the producers. The new formula takes into account "Market Prices" or paid by consumers.
You can get GVA at market prices by adding GVA at factor prices plus the addition of Indirect taxation minus any subsidies.
So in other words the value of the taxation net of any subsidies is now added to the value of the output.
2. THE BIGGEST OBJECTION to this method is that the GDP figure is OPEN to manipulation from two factors :
A. Raising Taxes
B. Subsidiy Disbursals
3. Now comes the fun part, lets start with Raising taxes. Now in an attempt to RAISE taxes they thought the first thing they have to do is to increase the tax net. So therefore they opted to increase the survey sample from a previous 25 00 companies to 500, 000 companies. Which is a good marketing ploy, and may have been useful if the intention had been to report accurate figures . But because a good number of these organizations are household enterprises which means that
I can start a company tommorrow in India and hand out financials worth of Hundreds of thousands of Revenue to the Surveying organization but regardless of whether i pay tax on it or not my org's revenue is still incorporated in the nations GDP figures.. Amazing.
Likewise, thousands if not millions of such organizations that had never published financials were "INCLUDED" in the tax calcuation resulting in an inflated GDP.
THIS NEVER HAPPENED in the previous calculation as indirect Taxes like sales were not included.
4. Using Tax growth from services industries in one sector is fine BUT then using those estimates to come up with GVA figures for the unorganized sector of manufacturing is potentially over-stating information.
How do you reconcile a balance sheet or income statement entry without having an associated source transaction to it ??
If this is not data fudging, I dont know what is !
5. And Taking tax returns from previous years for corporations to account for Value ADD for the current year is an acceptable practice ??
Specially given the fact that alot of those companies may have rolled up or be shell companies, or havent filled there tax returns for whatever reason
Does modi sarkar have a magic wand to come up with VALUE ADD on the basis of non-existant companies that never operated or even existed but added value from a GDP perspective ??
This is a laughable predicament !...hahahaha
Enough said. The main issue is not what others country have said or done but what happens in india from a GDP perspective. If your looking to set an example then merely "appearing to look like" implementing an international standard doesn't fit the bill from a Good GDP data perspective.
You have to have the right data to back it up as well.
Also get done with this indian habit of shooting the messenger in throwing rubbish at the author of the article as it ALSO lists several prominant Indian economists that back his assertion.
Stick to the topic - what we do in Pakistan is a topic for another discussion and you dont have to worry about what a citizen of another country says about your GDP BUT when your own Chief economists asks the world to "NOT BUY into the Growth numbers" to it, then maybe as investors in any sense, you should take it seriously
Ok so the breadth of your knowledge of economics is copying and pasting from this article:
and adding your underlines and red font to things that stand out to you...in an effort to make it look like you wrote it.
First question, how were any of these problems different to the older data series that used factor cost? I bet you couldn't answer that even if you tried, since it would involve you to spend days of research at the very least (and thats provided you know something about Economics to begin with).
How are they different to the massive problems all countries face in estimating GDP in the first place (Even large developed countries?)
Have you actually read any of the articles written by economists regarding countries such as China, US, Canada, UK, France etc.. regarding the change to SNA 2008?
The best part is you made it sound like the ENTIRE service sector revenue is based on tax deepening.
Here is your exact quote:
When the article clearly mentions qualifiers like "partly" "some" and "potentially" instead of direct "equals" and "all".
Every economist knows the main reason for the increase stem from moving up the base year and using GVA instead of factor cost over a higher amount of sample units.
The IMF itself has been involved in the process:
and there has been a downward revision recently as more back series data and coefficients becomes available.
The main critic quoted by the article (Subbarao) has a big axe to grind with the current administration of India and RBI....so his views are quite tainted.
The author of the article himself has cherry picked what suits his agenda....by not looking at what other economists have to say (to balance in the other direction) regarding notable improvements in the new series over the old one. He is after all a journalist.
If they are such issues and the only issues that matter, the IMF would not have vetted the series and their team would not have used it to forecast India's GDP in WEO till 2020.
Compare this to Pakistan where the IMF refuses to predict GDP past current financial year.
We really do not care what a person from such a country has to say about another's GDP estimate.
And now let me quash another myth that you propagate up here about how the IMF has helped india in setting the new standard.
This information needs to be taken with a grain of salt. ALL that the IMF did is went in to "ADVISE" of their experience on back tracking of data with other countries and to share "Best Practices". It was never an exercise of the IMF to "Certify" that India's backtracking process or the validity of the Data being used is "Authentic" !
Here is the reference from your own link as to how the IMF never "Audited" the process to test how accurate it is - So much for NOT fudging data !
India gets IMF help on 'back-casting' of new GDP data
"The team's visit was part of the IMF's regular programme of providing technical assistance to member countries for capacity building. Reports about the team auditing India's newly adopted GDP methodology were incorrect," Rice said.
However the alarm they showed at the BUMP is still a mystery according to Chief Economic Advisor
Arvind Subramanian, who had also served previously at IMF, last month termed the revised GDP growth figures have "puzzled" him and said the numbers have been "bumped up" and it was a mystery how to interpret them.
I guess he must have some beef against modi sarkar too ?? Isnt it ?? ALL are blind including the RBI chief except yourself
Ok so the breadth of your knowledge of economics is copying and pasting from this article:
and adding your underlines and red font to things that stand out to you...in an effort to make it look like you wrote it.
First question, how were any of these problems different to the older data series that used factor cost? I bet you couldn't answer that even if you tried, since it would involve you to spend days of research at the very least (and thats provided you know something about Economics to begin with).
How are they different to the massive problems all countries face in estimating GDP in the first place (Even large developed countries?)
Have you actually read any of the articles written by economists regarding countries such as China, US, Canada, UK, France etc.. regarding the change to SNA 2008?
The best part is you made it sound like the ENTIRE service sector revenue is based on tax deepening.
Here is your exact quote:
When the article clearly mentions qualifiers like "partly" "some" and "potentially" instead of direct "equals" and "all".
Every economist knows the main reason for the increase stem from moving up the base year and using GVA instead of factor cost over a higher amount of sample units.
The IMF itself has been involved in the process:
and there has been a downward revision recently as more back series data and coefficients becomes available.
The main critic quoted by the article (Subbarao) has a big axe to grind with the current administration of India and RBI....so his views are quite tainted.
The author of the article himself has cherry picked what suits his agenda....by not looking at what other economists have to say (to balance in the other direction) regarding notable improvements in the new series over the old one. He is after all a journalist.
If they are such issues and the only issues that matter, the IMF would not have vetted the series and their team would not have used it to forecast India's GDP in WEO till 2020.
Compare this to Pakistan where the IMF refuses to predict GDP past current financial year.
We really do not care what a person from such a country has to say about another's GDP estimate.
Oh and you had to use $$ in a word because you spell it that way in real life? I put a comma in my sentence...did not say one is the other.
But maybe distorting what I typed is all you can manage.
