75 trillion Rupees economy vs a 35 trillion RMB economy

[Yusuf]

Guys if we see the size of indias and chinas economy in terms of multiplying the dollar based gdp to their respective currency, what to the numbers tell us? Indias is a 75 trillion Rupees economy and chinas is 35 trillion RMB. So what does it mean at a domestic level?

 

[thakur_ritesh]

i think to find the meaning we need to look at the ppp numbers:

mate the indian gdp is at rs61,321,710,000,000 or rs61trillion, for a comparison we need to look at the ppp numbers where indian gdp is 3.87t usd (taking the current year's gdp numbers) to china's 9-9.2t usd. but then we are not including the black money and the parallel economy here. in india's case parallel economy is atleast 50% of the present economy active with in india, and then there are estimates thrown from 300b usd to 2t usd stacked up outside indian shores, i dont have a clue of the parallel economy in china but should be closer to the 50% mark much like india but the money overseas saved as black economy is projected between 100-200b usd (i highly suspect this figure).

all in all one is looking at wealth created with in india at around 6.5t usd (at the lower end) and wealth created in china at around 14t usd (numbers all converted to ppp - its a rough estimate).

 

[Yusuf]

would it be fair to assess how much 35 RMB and 75 rupees buys?

 

[Agantrope]

tr, believe it or not. My estimate of the parallel economy is between 4-4.5 times of the 'visible' economy. I'm doing a study on this now, and hope to be able to substantiate that with an accurate economic method..

Whats the problem in our country is that more than 70% transaction happens are through the mutual trust, now papers, bonds etc, One of my friend is running a tax consultant and as per his data Black economy in our country is 2-3 times the what the GDP of our nation today.

 

[Yusuf]

Rage I don't know if its 4 times or not, but I feel it is atleast the same as the white economy. I mean we are not accounting for the millions of small business who probably don't register with relevant authorities and do very good business. The cornerwala pav bhaji vendor who does at least a 10k biz everyday. I am not even talking about the under reported values by all small and big registered business.

 

[tarunraju]

would it be fair to assess how much 35 RMB and 75 rupees buys?

 

[Yusuf]

Tarun I know the currency conversion of rupees and RMB. What I am asking is at a domestic level what does it mean. I mean for local infrastructure development etc??

 

[thakur_ritesh]

holy cow! rage man that is mind blowing if true, but where and how did all that wealth creation happen. please do share the details. that will make your study one hell of a read, i am already longing to read your study when put it to paper.

would it be fair to assess how much 35 RMB and 75 rupees buys?

yes, which means we will be looking at the purchasing power of both currencies so i believe we will have to convert it to ppp in usd or ppp for any other currency, but then again in different parts of india and china the same rs75 and 35rbm would have different purchasing power.

 

[tarunraju]

Commodity and food prices in China are coarsely lower than in India, so China can make more out of its money than India can (dollar to dollar).

 

[Agantrope]

would it be fair to assess how much 35 RMB and 75 rupees buys?

Yusuf, in india, it will be very enough a normal with a income of 10K rupees per month to run his life and 20K for a family man to get his family running with all the required amenties like TV, Fridge, Washing Machine and a computer, no need to mention about the cell phones even a dobiwala using cell phone to increase his business.

This numbers will all return to the prosperity of the nation, if at all the food prices rise havent happened, the numbers would be still a different game

 

[Agantrope]

Commodity and food prices in China are coarsely lower than in India, so China can make more out of its money than India can (dollar to dollar).

Prosperity of a nation's economy depends on how well we spend the money. In India there a large group for spending the money as well a still large group to save the money. This is balanced kind of scenario.

Any Chinese insight over this will appreciated.

 

[tarunraju]

Prosperity of a nation's economy depends on how well we spend the money. In India there a large group for spending the money as well a still large group to save the money.

Negative, in a developing economy, prosperity depends on how effectively you're uplifting the poor. Our fuel prices are on par with those of highly-developed economies (where people can afford to pay so much for fuel), and so is our food. In China basic food items are extremely cheap, petrol goes for 35 INR per liter.

People need money for food and fuel right now, they barely end up with any money to save. Thank Bongress for giving a 'hand' to the aam aadmi.

 

[Yusuf]

Tarun, fuel prices is not related to any govt policy. Only the tax component is in their hand.

 

[tarunraju]

Tarun, fuel prices is not related to any govt policy. Only the tax component is in their hand.

It kind of is, when 55% of the end-user price is government tax. The government can potentially make petrol go for 40 INR/liter to get close to Chinese end-user prices of 35 INR per liter.

 

[Vinod2070]

I think much of the "black economy" is not going to productive uses. It is going in sectors like real estate that is making it out of reach of ordinary people.

 

[Agantrope]

It kind of is, when 55% of the end-user price is government tax. The government can potentially make petrol go for 40 INR/liter to get close to Chinese end-user prices of 35 INR per liter.

Main source of government revenue is from the excise duty that is levied on the crude oil and its product. How can government lose such a large income

 

[Agantrope]

I think much of the "black economy" is not going to productive uses. It is going in sectors like real estate that is making it out of reach of ordinary people.

Now-a-days real estate having much less money when compared to the other sectors. Thanks to reality builders.

 

[tarunraju]

Main source of government revenue is from the excise duty that is levied on the crude oil and its product. How can government lose such a large income

By setting its Revenue Department in order, and eating its way into the $1.7 trillion black economy.

 

[thakur_ritesh]

Negative, in a developing economy, prosperity depends on how effectively you're uplifting the poor. Our fuel prices are on par with those of highly-developed economies (where people can afford to pay so much for fuel), and so is our food. In China basic food items are extremely cheap, petrol goes for 35 INR per liter.

People need money for food and fuel right now, they barely end up with any money to save. Thank Bongress for giving a 'hand' to the aam aadmi.

each time the fuel and food prices shoot through the roof people cut down on their spendings not so much on their savings, metros apart where people have got used to living off credit the smaller towns and the villages where the vast majority of indians reside they remain highly averse to high spending and that is the precise reason india's savings rate has remained at a very healthy 35-40% of the gdp right from pre90 till date.

there is no denying that there is a scam in the inflation in the prices of food items and a drama that gets played behind the whole fuel price, a money which when collected is then used to subsidize various other schemes meant for the poor, but inflation is a living reality of any up coming economy since there is a sudden surge of money in the market the market is no way prepared to cater to the demand generated through that extra money supply so the easiest way to wipe off that money is escalation of prices all across, and its not only a congress thing but get xyz any one and the same will happen. the inflation rate in china in 80s and 90s was in double digit, but then they created capacities and so they are now able to keep it at around 2-3%.

 

[badguy2000]

Prosperity of a nation's economy depends on how well we spend the money. In India there a large group for spending the money as well a still large group to save the money. This is balanced kind of scenario.

Any Chinese insight over this will appreciated.

well, the best way is to list price of commodities and real assets BTW the two countries and compare them.....

1.apartment . it is the apartment of one of my colleagues. it is about 120 Square meters large and costs 0.6-0.7 M RMB here ( a grade C cite ,a prefecture-level city in inland CHina).
such a apartment( about 120 Square meters large) costs 2-4M RMB in grade A chinese cities such as Beijing or shanghai.
It costs 0.5-1.5M RMB in Grade B cities(province capital cities )
It costs 0.15-0.4 M RMB in grade D cities( county towns)

2. a family car ,the following cost 108K RMB.
most chinese family car costs about 100K RMB

3,one AC for a small room. it costs 2099 RMB