Discussion in 'Economy & Infrastructure' started by singa, Mar 2, 2011.
India's GDP Not What It Seems
Telecom revenue came last year. What about the years before that? How did india come up with impressive numbers? How did it come out unscathed during recession?
Yes policy initiatives are required but they will only add to the current growth rate and reach chineseque levels of 90s and the last decade.
This is a legitimate concern. But the 'revision in GDP' (acc. Nomura's suspect* figures; *suspect=explained below) is definitely, most certainly, not to the tune of 5.1% points. To even think, that 5.1% out of 8.7% points is government revenue in the form of indirect taxes and subsidies, is absurd. Besides, from the expenditure side, factor prices equal market cost minus (indirect) taxes plus subsidies. So, subsidies and indirect taxes work in the opposite direction. I don't know how they'd balance out, because I don't have access to specific Government statistics, but some part would cancel out the other.
The rest of the article is utter speculative non-sense. The author, Greg Peel, alleges that exports account for only 20% of India's GDP, and that, because June quarterly figures slowed, quarterly growth (of GDP) may have been slower than imagined, and the same is likely to happen in subsequent quarters. But, Jan's export figures have shown a growth of 28.1% year on year. Which is significant, considering Jan. last year was a stellar month for exports.
He admits to have not (or that Nomura has not ) included Delhis construction for the CW G, and asks how this would be reflected in GDP growth. Government construction is added to GDP, simple. As well as the CWG, there was also construction on the National Games. And I have this nagging suspicion, that he hasn't included a host of other Government construction programs as well. To boot, government construction grew by about 2.8% year-on-year. Remember, we also had a major stimulus the year before, and a more moderate stimulus last year (2010) and that stimulus compounds (via the money-multiplier).
The author admits that he's not an economist. When an int'l organization like the IMF, the World Bank; or one of India's many statistical organizations like indiastat, that compile their own independent figures from multiple, various sources come up with something like that, then I'll sit and take notice. He does raise an important point tho, and that is that factor price cost is not always the most useful, or most reflective, way of computing GDP. But that fact that his, and Nomura's, figures leave several things out of account, leave his argument suspect.
These articles about GDP revisions and security concerns are put out to discourage foreign investments from coming in, look at them as a positive. Money will always go where there is growth.
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