Getting Indian economy back on track
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Re: India's 8-9% growth was a fluke: Ruchir Sharma
Most industries just need 24hr uninterrupted ELECTRICITY and a moratorium on debt principles!
If they do that then i garuante the existing industry itself has tremendous potential to outgrow its old shell and invest in new areas.
FOR HEAVENS SAKE IS THAT ROCKET SCIENCE?
Most industries just need 24hr uninterrupted ELECTRICITY and a moratorium on debt principles!
If they do that then i garuante the existing industry itself has tremendous potential to outgrow its old shell and invest in new areas.
FOR HEAVENS SAKE IS THAT ROCKET SCIENCE?
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Re: India's 8-9% growth was a fluke: Ruchir Sharma
), for first few years, what we see will be due to the spillover of the UPA policies
^^^Not just that, most of the growth from the UPA 1 is actually from the spillover of the good governance and infra investments of the previous NDA. This is very true. Even now, if some how NDA magically manages to win the 2014 (Which is highly unlikely considering we are Talking about Indians
), for first few years, what we see will be due to the spillover of the UPA policiestrackwhack
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Re: India's 8-9% growth was a fluke: Ruchir Sharma
Now we have two clowns in town - Chetan Bhagat and Ruchir Sharma.
Now we have two clowns in town - Chetan Bhagat and Ruchir Sharma.
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Re: India's 8-9% growth was a fluke: Ruchir Sharma
That is true and also not true. During the period of NDA they where showing favoritism to IT industry and cutting their taxes etc., and other industries where suffering.They neglected other industries and went for IT and few other knowledge based companies.
It is true that they did have the balls to atleast start a few projects like the 4lane high roads.
^^^Not just that, most of the growth from the UPA 1 is actually from the spillover of the good governance and infra investments of the previous NDA. This is very true. Even now, if some how NDA magically manages to win the 2014 (Which is highly unlikely considering we are Talking about Indians
That is true and also not true. During the period of NDA they where showing favoritism to IT industry and cutting their taxes etc., and other industries where suffering.They neglected other industries and went for IT and few other knowledge based companies.
It is true that they did have the balls to atleast start a few projects like the 4lane high roads.
Re: India's 8-9% growth was a fluke: Ruchir Sharma
during that period of global high growth, even china grew 14%.
but obviously not a long term trend,
everyone grew fast during that period, it was abnormal time for global economy
during that period of global high growth, even china grew 14%.
but obviously not a long term trend,
everyone grew fast during that period, it was abnormal time for global economy
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Re: India's 8-9% growth was a fluke: Ruchir Sharma
Is it true? Any Links to back it up? I thought the growth for china's economy was around 10-11%
Re: India's 8-9% growth was a fluke: Ruchir Sharma
here you go, it is from wiki but it is well sourced: Historical GDP of the People's Republic of China - Wikipedia, the free encyclopedia
in 2007, china's real gdp growth was 14.2%.
it was an anomaly due to the global conditions of fast expansion, not a long term trend. everyone was growing fast in those years, it was a short term explosion in global markets.
in the article they are talking about the period of global growth right before the credit crunch, in the first paragraph.Is it true? Any Links to back it up? I thought the growth for china's economy was around 10-11%
here you go, it is from wiki but it is well sourced: Historical GDP of the People's Republic of China - Wikipedia, the free encyclopedia
in 2007, china's real gdp growth was 14.2%.
it was an anomaly due to the global conditions of fast expansion, not a long term trend. everyone was growing fast in those years, it was a short term explosion in global markets.
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Re: India's 8-9% growth was a fluke: Ruchir Sharma
China was growing at 14% and 12% when India was doing 9%. This is despite the fact that India had a smaller base to grow from while China had a larger base to manage and grow. Which means we should have atleast tied the chinese during that period. The chinese are lucky to have CCP in the economic angle if not anything else, which I see as their only advantage. Though I would prefer a Democracy any day over an Authoritarian state :cool2:.
Re: India's 8-9% growth was a fluke: Ruchir Sharma
though i would prioritize development first if i had to choose. both would be nice.
i don't see any inherent problem with democracy.
though i would prioritize development first if i had to choose. both would be nice.
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Re: India's 8-9% growth was a fluke: Ruchir Sharma
The Problem with Authoritarian state is that, once they get a foot hold, its hard to boot them out. It will be interesting to see the transformation in China in the coming decades. But anyway, any more discussion on Authoritarian Vs Democracy will be OT....
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Re: India's 8-9% growth was a fluke: Ruchir Sharma
China's GDP growth was never truly that high. When they were claiming 14% it was more like 8-9. They always fake inflation which is supposed to be figured into nominal GDP. Their exports are only slightly higher now than the peak in 2007.
China's GDP growth was never truly that high. When they were claiming 14% it was more like 8-9. They always fake inflation which is supposed to be figured into nominal GDP. Their exports are only slightly higher now than the peak in 2007.
Re: India's 8-9% growth was a fluke: Ruchir Sharma
In any case, what Ruchir is saying is that it wasn't the NDA or the UPA that was responsible for 8+% growth rate but the global capital liquidity. That the only real reforms done where in the 1990s and no real reforms have been done since. And 2003 the growth rates were higher only because the massive increased in global credit allowed all emerging markets to do well.
believes that the superlative growth rates achieved by India between 2003 and 2008 (above 8 percent) was an extremely short-term phenomenon driven by a huge gush of global liquidity, and did not pave the way for future high growth rates. And now that the easy credit is cut off since the GFC, it becomes harder to maintain that growth.
His main idea is that the massive global credit increase in that period was an aberration in itself, that led to the higher than average GDP growth rates.
The spill over can last for 1-2 years, not for 7 years in a row and particularly not in the face of the GFC that required active govt. intervention in 2008-2010 period and still maintain a 8+% growth.^^^Not just that, most of the growth from the UPA 1 is actually from the spillover of the good governance and infra investments of the previous NDA. This is very true. Even now, if some how NDA magically manages to win the 2014 (Which is highly unlikely considering we are Talking about Indians
In any case, what Ruchir is saying is that it wasn't the NDA or the UPA that was responsible for 8+% growth rate but the global capital liquidity. That the only real reforms done where in the 1990s and no real reforms have been done since. And 2003 the growth rates were higher only because the massive increased in global credit allowed all emerging markets to do well.
believes that the superlative growth rates achieved by India between 2003 and 2008 (above 8 percent) was an extremely short-term phenomenon driven by a huge gush of global liquidity, and did not pave the way for future high growth rates. And now that the easy credit is cut off since the GFC, it becomes harder to maintain that growth.
His main idea is that the massive global credit increase in that period was an aberration in itself, that led to the higher than average GDP growth rates.
Re: Standard & Poor's warns India of a downgrade to junk category
The ridciulous thing would be that if India gets downgraded, its bond rating would be the same as Greece which has collpased and is already in financial ruin. Any sane person would laugh at the comparison of India and Greece being done by S&P.
Something is really messed up in the S&P rating system if this is the case.
What I find funny is that Spain that is getting 140Billion dollar bailout for its banks still holds a BBB+ rating while India has a BBB- and is being threatened with a downgrade.
The ridciulous thing would be that if India gets downgraded, its bond rating would be the same as Greece which has collpased and is already in financial ruin. Any sane person would laugh at the comparison of India and Greece being done by S&P.
Something is really messed up in the S&P rating system if this is the case.
Don't Count India Out Just Yet - NYTimes.com
News out of India as of late has been either bad or dreadful. Recently released statistics confirm that growth has been even lower than forecast. Most recently, poor jobs numbers confirm that the economy is in the doldrums and a report from the country's Planning Commission shows that India is lagging in a range of social and economic indicators linked to the United Nations' Millennium Development Goals.
While there is room for debate, most analysts contend that the current Indian government's repeated failures to implement much needed economic reforms lie at the heart of the burgeoning economic malaise. In a recent news analysis piece in The Financial Times, journalist James Crabtree bluntly lays the blame on a "toxic mixture of government inaction and business caution." What is undeniable is that the souring of the India story has global economic, financial and political implications, with observers and investors, both domestic and foreign, warning that things could get worse before they get better.
Here are the facts right now: in the fiscal year that just ended the economy grew at 6.5 percent, sharply down from 8.4 percent a year earlier. The investment bank Morgan Stanley has recently downgraded its forecast for 2013 to 5.7 percent, in line with other major institutions.
So what do these numbers really mean, and how worried should we be about India's long-term prospects?
As a matter of basic macroeconomics, the growth rate in any given year can be broken – or "decomposed," in statistical jargon – into a long-term trend and a transitory component.
The trend represents the growth rate the economy "should" enjoy based on underlying fundamentals like savings and investment as well as the efficiency with which capital is used, along with the productivity-enhancing effects of new technology (whether indigenous or imported).
The transitory component, in turn, captures the effects of the business cycle, both domestic and global, climatic factors (like whether the monsoon rains were better or worse than average), and anything else that represents a temporary deviation from the long-term trend, such as an unexplained worsening in consumer or investor confidence.
As I argued last fall in India Ink, based on the data we then had, India's trend rate of growth should be around 8.75 percent, based on the underlying fundamentals of savings and investment as well as the efficiency with which capital is used.
So while the performance of two years ago at 8.4 percent is consistent with the economy being at or near its long-term trend, this past year's growth rate of 6.5 percent, a full two percentage points lower, raises the crucial question: Can this be reckoned to be caused by transitory factors that could be expected to disappear, or, more ominously, has India settled into a new and lower long-term trend?
As a recent roundup of economic articles in India Ink suggests, most commentators fall on the pessimistic, rather than the optimistic, side of the ledger.
Representative of the zeitgeist is a recent blog post by Shanmuganathan Nagasundaram, an economist and investment adviser, who argues that 5 percent growth is the "new normal." He bases this gloomy assessment on projections for the major sectoral components of G.D.P. and trends in global markets that are expected to have a depressing effect on the Indian economy.
Unfortunately, Mr. Nagasundaram's projections seem based more on his disapproval of the Indian government's economic policy stance than a persuasive statistical analysis. He tips his hand when he writes: "For India to achieve nirvana-like higher growth rates, the economic team has to put its faith in capitalism"¦rather than the interventionist/government-knows-best approach they have adopted." Whether one agrees with him or not, this is ideology, not economics.
In an analysis piece in the magazine Frontline, the economist C.P. Chandrasekhar is more balanced, and marshals a multitude of facts and figures, but he too offers an impressionistic rather than a rigorously statistical take. And again he reveals his ideological stance when he advocates "controls on the movement of footloose and speculative capital" as an essential element in restoring high growth.
To come clean on my own hunch, I would argue that, even though things have worsened since last year, the long-term growth rate, based on the underlying fundamentals of savings and investment, cannot by any reasonable accounting be much below 7 percent.
Here's the reason: the falloff in investment from a high of 35 to 36 percent a few years ago (which translates into 8.75 percent growth) toward 30 percent is a proximate cause of the growth slowdown, but it still suggests that India's long term growth potential is around 7.5 percent. In a recent op-ed column, Ashutosh Varshney, a professor of political science at Brown, draws on this macroeconomic relationship between investment and growth in coming to a nuanced view of the current situation, although he notes the dropoff in the investment rate with alarm.
The truth is that a neutral parsing of the data, shorn of a preconceived ideological view, cannot conclusively tell us whether the country is now headed for a new and lower growth path of 5 percent, or rather if the poor performance of the past year and a half is an aberration from a healthier long-term trend of 7 to 8 percent. A year or two of data is simply not enough to make a statistically definitive judgement on the matter. Anyone who claims otherwise is practising voodoo economics.
At least one commentator agrees with me on this last point. In an op-ed column in the newspaper DNA, Parsa Venkateshwar Rao Jr. writes: "The temptation to pronounce the end of [the] India growth story amounts to jumping to conclusions based on inconclusive data and [a] changing situation."
I posed to Mr. Varshney whether he believed that India's long-term growth prospects were still good. He told me via e-mail: "I do believe that we will be back to 7 percent, but the government ought not be complacent that India is on some sort of autopilot for a 7 percent growth rate."
That's exactly the right balance between optimism and pessimism that recent developments demand.
News out of India as of late has been either bad or dreadful. Recently released statistics confirm that growth has been even lower than forecast. Most recently, poor jobs numbers confirm that the economy is in the doldrums and a report from the country's Planning Commission shows that India is lagging in a range of social and economic indicators linked to the United Nations' Millennium Development Goals.
While there is room for debate, most analysts contend that the current Indian government's repeated failures to implement much needed economic reforms lie at the heart of the burgeoning economic malaise. In a recent news analysis piece in The Financial Times, journalist James Crabtree bluntly lays the blame on a "toxic mixture of government inaction and business caution." What is undeniable is that the souring of the India story has global economic, financial and political implications, with observers and investors, both domestic and foreign, warning that things could get worse before they get better.
Here are the facts right now: in the fiscal year that just ended the economy grew at 6.5 percent, sharply down from 8.4 percent a year earlier. The investment bank Morgan Stanley has recently downgraded its forecast for 2013 to 5.7 percent, in line with other major institutions.
So what do these numbers really mean, and how worried should we be about India's long-term prospects?
As a matter of basic macroeconomics, the growth rate in any given year can be broken – or "decomposed," in statistical jargon – into a long-term trend and a transitory component.
The trend represents the growth rate the economy "should" enjoy based on underlying fundamentals like savings and investment as well as the efficiency with which capital is used, along with the productivity-enhancing effects of new technology (whether indigenous or imported).
The transitory component, in turn, captures the effects of the business cycle, both domestic and global, climatic factors (like whether the monsoon rains were better or worse than average), and anything else that represents a temporary deviation from the long-term trend, such as an unexplained worsening in consumer or investor confidence.
As I argued last fall in India Ink, based on the data we then had, India's trend rate of growth should be around 8.75 percent, based on the underlying fundamentals of savings and investment as well as the efficiency with which capital is used.
So while the performance of two years ago at 8.4 percent is consistent with the economy being at or near its long-term trend, this past year's growth rate of 6.5 percent, a full two percentage points lower, raises the crucial question: Can this be reckoned to be caused by transitory factors that could be expected to disappear, or, more ominously, has India settled into a new and lower long-term trend?
As a recent roundup of economic articles in India Ink suggests, most commentators fall on the pessimistic, rather than the optimistic, side of the ledger.
Representative of the zeitgeist is a recent blog post by Shanmuganathan Nagasundaram, an economist and investment adviser, who argues that 5 percent growth is the "new normal." He bases this gloomy assessment on projections for the major sectoral components of G.D.P. and trends in global markets that are expected to have a depressing effect on the Indian economy.
Unfortunately, Mr. Nagasundaram's projections seem based more on his disapproval of the Indian government's economic policy stance than a persuasive statistical analysis. He tips his hand when he writes: "For India to achieve nirvana-like higher growth rates, the economic team has to put its faith in capitalism"¦rather than the interventionist/government-knows-best approach they have adopted." Whether one agrees with him or not, this is ideology, not economics.
In an analysis piece in the magazine Frontline, the economist C.P. Chandrasekhar is more balanced, and marshals a multitude of facts and figures, but he too offers an impressionistic rather than a rigorously statistical take. And again he reveals his ideological stance when he advocates "controls on the movement of footloose and speculative capital" as an essential element in restoring high growth.
To come clean on my own hunch, I would argue that, even though things have worsened since last year, the long-term growth rate, based on the underlying fundamentals of savings and investment, cannot by any reasonable accounting be much below 7 percent.
Here's the reason: the falloff in investment from a high of 35 to 36 percent a few years ago (which translates into 8.75 percent growth) toward 30 percent is a proximate cause of the growth slowdown, but it still suggests that India's long term growth potential is around 7.5 percent. In a recent op-ed column, Ashutosh Varshney, a professor of political science at Brown, draws on this macroeconomic relationship between investment and growth in coming to a nuanced view of the current situation, although he notes the dropoff in the investment rate with alarm.
The truth is that a neutral parsing of the data, shorn of a preconceived ideological view, cannot conclusively tell us whether the country is now headed for a new and lower growth path of 5 percent, or rather if the poor performance of the past year and a half is an aberration from a healthier long-term trend of 7 to 8 percent. A year or two of data is simply not enough to make a statistically definitive judgement on the matter. Anyone who claims otherwise is practising voodoo economics.
At least one commentator agrees with me on this last point. In an op-ed column in the newspaper DNA, Parsa Venkateshwar Rao Jr. writes: "The temptation to pronounce the end of [the] India growth story amounts to jumping to conclusions based on inconclusive data and [a] changing situation."
I posed to Mr. Varshney whether he believed that India's long-term growth prospects were still good. He told me via e-mail: "I do believe that we will be back to 7 percent, but the government ought not be complacent that India is on some sort of autopilot for a 7 percent growth rate."
That's exactly the right balance between optimism and pessimism that recent developments demand.
parijataka
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Re: India's 8-9% growth was a fluke: Ruchir Sharma
Also, NDA rule is the only period in which Indian Rupee appreciated vis a vis US Dollar [correct me if I am wrong, anyone].
^^^Not just that, most of the growth from the UPA 1 is actually from the spillover of the good governance and infra investments of the previous NDA. This is very true. Even now, if some how NDA magically manages to win the 2014 (Which is highly unlikely considering we are Talking about Indians
Also, NDA rule is the only period in which Indian Rupee appreciated vis a vis US Dollar [correct me if I am wrong, anyone].
panduranghari
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Re: Standard & Poor's warns India of a downgrade to junk category
They want India to sell or pawn its gold like they did in 1991. India will never do that, hence the charade.
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April IIP growth at 0.1%
Capital goods saw the biggest contraction of 16.3% .
I am just beginning to lose faith in Indian economy now.
http://www.business-standard.com/india/news/markets-shrug-off-weak-april-iip-data/174364/on
Capital goods saw the biggest contraction of 16.3% .
I am just beginning to lose faith in Indian economy now.
http://www.business-standard.com/india/news/markets-shrug-off-weak-april-iip-data/174364/on
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SHOCKING: April industrial output growth only 0.1%, worse than expected
April industrial output up 0.1%, worse than expected - The Times of India
NEW DELHI: Industrial production growth rate slowed down sharply to 0.1 per cent in April due to contraction in capital goods and dip in manufacturing output, reflecting the sluggish state of the economy that may prompt RBI to cut lending rates.
Growth in factory output, as measured by the Index of Industrial Production (IIP), was 5.3 per cent in April last year.
The manufacturing sector, which constitutes over 75 per cent of the index, grew barely 0.1 per cent, as against 5.7 per cent in April 2011, according to the official data released on Tuesday.
The capital goods output declined by 16.3 per cent as against a growth of 6.6 per cent in the same month last year.
Mining output contracted by 3.1 per cent in April, as against growth of 1.6 per cent in the same month a year ago.
The slowdown in industrial production is likely to put pressure on the Reserve Bank to cut lending rates at its mid-quarterly review on June 18.
However, consumer goods production showed a faster growth rate of 5.2 per cent in April, compared to 3.2 per cent in the same month last year.
The consumer durables segment also expanded by 5 per cent in April, as against 1.6 per cent in the same month last year.
Power generation witnessed a slower growth of 4.6 per cent during April, compared to 6.5 per cent in the same month a year ago.
In all, 12 of the 22 industry groups in the manufacturing sector have shown positive growth during April as compared to the same month a year ago.
April industrial output up 0.1%, worse than expected - The Times of India
NEW DELHI: Industrial production growth rate slowed down sharply to 0.1 per cent in April due to contraction in capital goods and dip in manufacturing output, reflecting the sluggish state of the economy that may prompt RBI to cut lending rates.
Growth in factory output, as measured by the Index of Industrial Production (IIP), was 5.3 per cent in April last year.
The manufacturing sector, which constitutes over 75 per cent of the index, grew barely 0.1 per cent, as against 5.7 per cent in April 2011, according to the official data released on Tuesday.
The capital goods output declined by 16.3 per cent as against a growth of 6.6 per cent in the same month last year.
Mining output contracted by 3.1 per cent in April, as against growth of 1.6 per cent in the same month a year ago.
The slowdown in industrial production is likely to put pressure on the Reserve Bank to cut lending rates at its mid-quarterly review on June 18.
However, consumer goods production showed a faster growth rate of 5.2 per cent in April, compared to 3.2 per cent in the same month last year.
The consumer durables segment also expanded by 5 per cent in April, as against 1.6 per cent in the same month last year.
Power generation witnessed a slower growth of 4.6 per cent during April, compared to 6.5 per cent in the same month a year ago.
In all, 12 of the 22 industry groups in the manufacturing sector have shown positive growth during April as compared to the same month a year ago.
