India is now over 2 trillion dollar economy

[Rowdy]

I do not get you fixation to nominal country GDP. With that logic our GDP is 18.5 Trillion dollars us being an EU country. The only thing that matters is the per person figure. When that is up to a certain level you can start to build instead of just surviving....

Yes per person Nominal (not PPP) is what matters.

 

[Mad Indian]

@Rowdy

Yeah a person earning 2lakhs in India in Chennai is going to afford the same lifestyle as a person living in NY USA, earning 2 lakhs.

You are nuts

 

[Rowdy]

@Rowdy

Yeah a person earning 2lakhs in India in Chennai is going to afford the same lifestyle as a person living in NY USA, earning 2 lakhs.

You are nuts

Where have I written that moron. That difference is exactly what PPP means ... Purchasing power parity ...

 

[Sakal Gharelu Ustad]

@Rowdy

Yeah a person earning 2lakhs in India in Chennai is going to afford the same lifestyle as a person living in NY USA, earning 2 lakhs.

You are nuts

A person earning 2 lakh PPP Rs. in Chennai is same as a person earning 2 lakh PPP Rs in USA.

 

[Mad Indian]

GDP (PPP) is calculated by GDP(local currency)*x*y
where x= 1/(exchange rate)
und y= some multiplication factor.
Now what is y
suppose a bag of rice costs 50 Rs in india but 2 € in Germany.
Now direct conversion gives the costs respectively as 50 Rs and 2*70 = 140 Rs. So does rice bag cost double in germany ???? or conversly must a german work double to earn a bag of rice?
Not really. Here depending on the cost of living & the cost of essentials a factor y will be calculated that will make these costs similar.
So assume the factor is 5 (i.e. I can have the same standard of living in India with a one fifth salary(in doller terms) i.e. I will work for 200$ but an american IN AMERICA will do the same in 1000$ )
Advantages:-
Good for comparing markets and Human Development and their moneys strength IN ITS OWN MARKET)
Now,
India goes to the oil market and wants to buy a barrel of Oil. It needs 53$ as of today.
Here you will have to shell out 53*63(exchange rate) = 3393 Rs .... you can slap that PPP in the face of that arab sheikh but it wont help ya one bit.
Same if you go on a trip to US. All that PPP will be like thin air

Again when the arab sheik wants to buy our food , he has to pay with nomal cash. Which negates the whole nominal GDP is important thingy

 

[Mad Indian]

A person earning 2 lakh PPP Rs. in Chennai is same as a person earning 2 lakh PPP Rs in USA.

Exactly why I consider PPP as a better measure of wealth. Is that not what I said?

 

[Rowdy]

A person earning 2 lakh PPP Rs. in Chennai is same as a person earning 2 lakh PPP Rs in USA.

Exactly and to get his salary in Rupees we need to divide the 2 lakh PPP by the factors x and y as explained in my previous post.

 

[Mad Indian]

Where have I written that moron. That difference is exactly what PPP means ... Purchasing power parity ...

Then how is nominal GDP accurate description of a person's wealth and standard of living as you claimed in your reply to jouni?

 

[Mad Indian]

Exactly and to get his salary in Rupees we need to divide the 2 lakh PPP by the factors x and y as explained in my previous post.

Which is exactly why PPP is a better measure of economies than nominal GDP . duh . you were claiming the opposite.

If we are to go by the claim that nominal GDP is better measure of wealth, then 2lakhs nominal salary in India and 2lakhs nominal salry in USA must be the same.

 

[Sakal Gharelu Ustad]

Everyone understands everything. This thread is bullshit.

 

[Mad Indian]

Everyone understands everything. This thread is bullshit.

Dude I have always had this doubt. So does the govt count the outsourced services towards our exports?

And is it not the reason for the apparent imbalance of our trade? Because it makes no sense that rupee is appreciating when our trade "imbalance" is growing. What other factors contribute to rupee appreciation.

And is it not true that we need a weak rupee for stimulating investments here ?

 

[Rowdy]

Then how is nominal GDP accurate description of a person's wealth and standard of living moron?

Simply because you need money in Nominal terms to conduct world trade. No one expects PPP money as it doesn't exist. PPP is a mathematical construction purely made to compare apples and oranges.... like comparing two fruits by their Vitamin contents.

Which is exactly why PPP is a better measure of economies than nominal GDP . duh . you were claiming the opposite.

Nope.
here is my post.

Not really. Both serve different functions.
PPP is good when you want to account for difference in input/ living costs
e.g. GDP(PPP) is good when you want to measure and compare the size of e.g. Vegetable market in say Europe and India.
GDP(Nominal) is good when you want to compare financial strength between say US and China or India and PAK.
Apples to oranges.

I did however say that GDP Nominal per person is the ultimate measure of wealth. It means that a person is not just rich according to his own market (2 lakh rs in Chennai), but is rich in US too( currently 2 lakh Rs in US are not so strong). That means the factor y is close to 1 as possible.

Again when the arab sheik wants to buy our food , he has to pay with nomal cash. Which negates the whole nominal GDP is important thingy

Bro ... this is retarded .... I'm not gonna reply to this .... lol have fun in LaLa land.

 

[Mad Indian]

Simply because you need money in Nominal terms to conduct world trade. No one expects PPP money as it doesn't exist. PPP is a mathematical construction purely made to compare apples and oranges.... like comparing two fruits by their Vitamin contents.
Nope.
here is my post.
I did however say that GDP Nominal per person is the ultimate measure of wealth. It means that a person is not just rich according to his own market (2 lakh rs in Chennai), but is rich in US too( currently 2 lakh Rs in US are not so strong). That means the factor y is close to 1 as possible.
Bro ... this is retarded .... I'm not gonna reply to this .... lol have fun in LaLa land.

dude nominal GDP measure was insufficient in actually making correct or accurate measure of the economies of the world or measruing standard of living. That's why PPP measure of economies was introduced- to make the measuring of GDP more meaningful. That's what I said. It's not like they invented two different things for two different purposes.

Regarding the penultimate para- yeah right, whether some one can live in USA or not is how you measure wealth of the person, not on the services he can get in his country .

You guys are so focused on the numbers that you guys fail to see the actual purpose of those numbers- too clever by half IMO .

 

[Sakal Gharelu Ustad]

Dude I have always had this doubt. So does the govt count the outsourced services towards our exports?

And is it not the reason for the apparent imbalance of our trade? Because it makes no sense that rupee is appreciating when our trade "imbalance" is growing. What other factors contribute to rupee appreciation.

And is it not true that we need a weak rupee for stimulating investments here ?

Services is part of exported goods and services.

Rupee can appreciate due to many factors. For eg. Given capital account is open, people want to invest in India. They bring dollars and buy rupees, thus increasing demand of rupee and appreciating its value. Trade imbalance can grow while rupee appreciates!

We need a weak rupee for attracting foreign investments and sell Indian goods abroad. But half of the people here think, strong currency is useful!!

 

[Rowdy]

We need a weak rupee for attracting foreign investments and sell Indian goods abroad. But half of the people here think, strong currency is useful!!

Right now ... not at all
Make in India's fiscal policy should be a stable , predictable and low valued rupee..... That way our exports are cheaper.
I don't like to use weak as I believe a currency's stability is governed by the stability of the economic fundamentals of that country. Hence rupee can be low valued and "strong"

 

[Sakal Gharelu Ustad]

Right now ... not at all
Make in India's fiscal policy should be a stable , predictable and low valued rupee..... That way our exports are cheaper.
I don't like to use weak as I believe a currency's stability is governed by the stability of the economic fundamentals of that country. Hence rupee can be low valued and "strong"

Can you make any sense out of your post!!

 

[Rowdy]

Can you make any sense out of your post!!

regret the inability towards understanding my laconic post.
Make in India=> Export=> Must be competitive=> Lower exchange rate for Rupee + predictable so that foreign businesses know beforehand and can estimate their "take home profits"
2nd para
Weak=> something like greece=> I like using the term low value=>because our consumption based fundamentals are strong and hence INR is a "strong" currency (strength independent from exchange rate). Example is the Yen .5 INR= 1 Yen so is the Yen weak??? Nope.

 

[Mad Indian]

Services is part of exported goods and services.

Rupee can appreciate due to many factors. For eg. Given capital account is open, people want to invest in India. They bring dollars and buy rupees, thus increasing demand of rupee and appreciating its value. Trade imbalance can grow while rupee appreciates!

We need a weak rupee for attracting foreign investments and sell Indian goods abroad. But half of the people here think, strong currency is useful!!

But that's not my question. What i actually want to know is does the govt calculate the money earned from our call centers and it officers in its exports column when it is reviewing our trade balance. I am asking this because govt typically does not add remittances as part of trade balance.

Red part is something which I dint know till very recently. The most common justification that we need a stronger rupee is that we have trade imbalance. But it is precisely this trade imbalance which necessitates a weaker rupee so that it gives chance for the exports to pick up! Also if we can find that the money generated from the investments and outsourcing is higher than the imports , we can finally make everyone agree that we need a weaker rupee

 

[avknight1408]

The chinese are cunning. For their exports to be competitive They artificially kept their currency at the same rate for many years. No wonder they have $3trillion+ forex. Our RBI cant replicate what china did.

 

[no smoking]

The chinese are cunning. For their exports to be competitive They artificially kept their currency at the same rate for many years. No wonder they have $3trillion+ forex. Our RBI cant replicate what china did.

Keeping currency at the lower level for MANY YEARS is definitely not an easy job. There were only 3 countries managed to do that successfully: Japan, South Korea and China.