Indian Economy: News and Discussion

[Haldiram]

But how will they manage fiscal deficit?

They'll fund it with GILT bonds and offload it to the people as inflation. It will basically postpone the hanging sword, but the economic machine wont stop because of fiscal deficit.

USA ka aise hi deficit postpone karte karte 20 trillion $ ka debt ho chuka hai.

At present the US has the same amount of debt they had during the world war.

Majja ni life. Sabh chill hai ekdum. Ain't nobody making doomsday projections of the US. Everyone has their cards up their sleeve.

 

[fire starter]

They'll fund it with GILT bonds and offload it to the people as inflation. It will basically postpone the hanging sword, but the economic machine wont stop because of fiscal deficit.

USA ka aise hi deficit postpone karte karte 20 trillion $ ka debt ho chuka hai.

At present the US has the same amount of debt they had during the world war.

Majja ni life. Sabh chill hai ekdum. Ain't nobody making doomsday projections of the US. Everyone has their cards up their sleeve.

but USA can write off their loans am I right.........

 

[Haldiram]

but USA can write off their loans am I right.........

..they use petrodollars to hedge themselves externally, but internally they are still answerable to their people. That's why their medical, tuition, living costs are increasing faster than rate of increase of income levels. It's like a frog in a burner situation for their people. National debt is being offloaded to them in the form of expensive services. In our case, it's done through government bonds and extracted via petrol surcharge. In the end, no country has an unlimited source of money. The debt does get offloaded collectively to the people in one way or another. It doesn't kill an economy. Thoda bahot creative accounting karke, postpone-prepone karke chalta rehta hai, just like we middle class people run our house on a rainy day by postponing some expenses, taking udhaari from baaju wala, taking a loan, repaying it at a later date etc. Wahi hai bas, on a larger scale.

 

[ezsasa]

BC some body tells me why they are haording these dollars... and if there is a economic slow down where these dollars are coming in......

Almost All major economies are hoarding forex India, Russia , Germany over past 4-5 years. China anyways they do it because of their forex system internally.

As if they see something, which is not yet in public discussion.

 

[ezsasa]

They'll fund it with GILT bonds and offload it to the people as inflation. It will basically postpone the hanging sword, but the economic machine wont stop because of fiscal deficit.

USA ka aise hi deficit postpone karte karte 20 trillion $ ka debt ho chuka hai.

At present the US has the same amount of debt they had during the world war.

Majja ni life. Sabh chill hai ekdum. Ain't nobody making doomsday projections of the US. Everyone has their cards up their sleeve.

This morning I was reading somewhere something about govt selling bonds to RBI, to raise the cash.

Also something about converting short term bonds to long term bonds.

 

[Haldiram]

This morning I was reading somewhere something about govt selling bonds to RBI, to raise the cash.

Also something about converting short term bonds to long term bonds.

Haan wahi hai. The bonds they give to RBI is basically adding to our inflation. They'll have to pay the coupon rate on those bonds later. It's just a fancy way of borrowing money from RBI at 7% interest rate. Then they'll pump it into banks for liquidity, which will find its way into funding for infra projects. Long story short, that money borrowed at 7% will end up yielding around 12% over a decade, so the borrowing will have generated net positive value. If it doesn't happen, then it will end up adding to the deficit.

 

[IndianHawk]

Almost All major economies are hoarding forex India, Russia , Germany over past 4-5 years. China anyways they do it because of their forex system internally.

As if they see something, which is not yet in public discussion.

They did it because USA could wreck havoc anytime by reversing quantitative easing policy.

Remember rupee in 2013 . Lesson learned , hoard Forex and don't trust US fed policy ever .

 

[Hiranyaksha]

I think US or any big western economy cannot do away with QE. QE is here to stay.
US has been printing dollars and giving it away to President keeping the economy afloat. Keeping recession at bay for now.
It can only go on till it can then it had to stop. Recession. Then QE will start again.

 

[IndianHawk]

I think US or any big western economy cannot do away with QE. QE is here to stay .

The problem is that even when they talk about rolling back QE emerging currencies are jolted with speculation.

 

[Hiranyaksha]

The problem is that even when they talk about rolling back QE emerging currencies are jolted with speculation.

US does not care about emerging economies. It needs QE to keep expanding their economy. Remember US has just 300 million people.

 

[Hiranyaksha]

And as far why India is building up foreign reserves is that now India wants to integrate itself with big players.
China did it by buying US bonds. Bringing in policy reforms, creating market for international companies, and signing different trade deals and security agreements these are all signalling in the particular direction.
My only concern is that India might lose the demographic dividend with such a slow pace.
Growth is coming to India but only time will tell whether it will be sufficient for 1.3 billion.

 

[IndianHawk]

US does not care about emerging economies. It needs QE to keep expanding their economy. Remember US has just 300 million people.

While that's true QE can't run forever. It has to stop someday.

 

[Hiranyaksha]

While that's true QE can't run forever. It has to stop someday.

Yes,it will stop but intermittently. Problem is that global economic model is broken. And nobody has the solution. Western economic model expects future generations to bail them out. Future generations are already neck deep in debt and they are not even performing as good as previous generations did.
Which is why QE. As simple as that.
West now wants India to take up their debt in exchange of growth and prosperity but on their terms.

 

[IndianHawk]

Yes,it will stop but intermittently. Problem is that global economic model is broken. And nobody has the solution. Western economic model expects future generations to bail them out. Future generations are already neck deep in debt and they are not even performing as good as previous generations did.
Which is why QE. As simple as that.
West now wants India to take up their debt in exchange of growth and prosperity but on their terms.

Not just west even Japan and China want India to take up their debt. A huge amount of adb and aiib funding will end up in India .

 

[captscooby81]

As if we don't have internal issues of economic growth now western world is pushing these climate change thugs like Greta thugberg to disrupt more of developing nations economy by pushing climate change fear mongering and stopping power productions from fossil fuels and making to invest more on clean energy which can't match the nuclear power capacity.

 

[ezsasa]

As if we don't have internal issues of economic growth now western world is pushing these climate change thugs like Greta thugberg to disrupt more of developing nations economy by pushing climate change fear mongering and stopping power productions from fossil fuels and making to invest more on clean energy which can't match the nuclear power capacity.

Thankfully modi govt has been taking initiatives because of which no one can raise a finger on us.

Infact India is one of the 8 countries who is actually doing what’s needed.

Otherwise these climate change useful idiots would have made modi a prime target using their stupid nonsense.

 

[captscooby81]

Separating fact from economic fiction: Growth slowed beyond expectations starting late 2018
Our very conservative estimate is that absolute poverty in 2017-18 was in the low to mid-single digits — a decline of 6-8 percentage points from the 14 per cent level in 2011-12. This is indeed a happy note as we celebrate 70 years of the creation of the Indian Republic.

Written by Surjit S Bhalla , Karan Bhasin | Updated: January 25, 2020 11:40:37 am

Some political economy experts believe that demonetisation is responsible for the 2019 slowdown, while others believe that the GDP data are flawed because it does not adequately capture informal sector activity.

If politics is mixed with economics, and the two are combined with ideology, then what we have is what can be called a “potent” mixture. That is the case today with discussions on the Indian economy.

We belong to the camp which believes that GDP growth was 7 per cent for the first five years of the Narendra Modi government, and that growth has fallen woefully short of predictions, and expectations, to 5 per cent in 2019-20. This is an unprecedented fall in a non-crisis year and all experts who were arguing for a tight monetary and fiscal policy should ask themselves where they went wrong.

While this soul-searching is going on, we want to address the confusion that has erupted because of the steep slide in GDP growth in 2019-20. Many commentators have conflated two distinct episodes and are presenting them as one. Their contention is that the recent slowdown has been a permanent fixture of the Indian economy, especially since Modi took over the reins in 2014. Some experts say that India is already back to its pre-liberalisation era of slow economic growth of around 3-5 per cent.

Opinion | As the Republic turns 70, the nation’s growth prospects seem fraught

Now, couple this with the fact that the Modi government has dumped the NSS consumer expenditure survey for 2017-18. Incidentally, we are in full agreement with the decision to treat the report with the disdain it deserves. But, we are not in agreement with the decision to not release the unit-level data. The unit-level data must be released, if only to document the reality that there is something wrong with the NSS architecture in collecting data.

We believe that the truth is hidden somewhere in the muddled data, and that the responsibility of a good researcher is to extract information from the noise. Towards this end, we bring a diverse set of statistical facts to the table — from night lights data, to national accounts, to data brought out by organisations on TV sales, internet subscriptions, automobile sales, and airline passengers.

Is 2019 different from the 2014-2018 period? A resounding yes, according to the night lights data. The nightlights data is available with the Earth Observation Group at the National Oceanic and Atmospheric Administration. It comprises low-light imaging data collected by satellites and filtered to measure the quantity of artificial (human-generated) light in an area. The data enabled us to capture economic activity between 2012 and 2017. Data for the first four months of the first four years (for 2019, data is only available till April) shows an average growth of 12.5 per cent per year; growth for the first two quarters (January to June) between 2014 and 2018 averages 7.1 per cent annually. In the first two quarters of the 2019 calendar year, GDP growth averaged 5.4 per cent, while night lights averaged 5.8 per cent. Both very distinct measures of economic activity suggest that 2019 was a bad year and that the prior years had significantly higher economic activity.

Some political economy experts believe that demonetisation is responsible for the 2019 slowdown, while others believe that the GDP data are flawed because it does not adequately capture informal sector activity. The months immediately following demonetisation (November-January) do show an average growth of minus 20 per cent, while over the next 16 months, growth averaged 23 per cent. This strongly indicates that something happened to cause growth to sharply decelerate in late 2018. But, it was not demonetisation or GST. We believe the evidence is supportive of the argument that the ultra-tight monetary policy followed by the Urjit Patel-Viral Acharya duo and the NBFC crisis (exaggerated by tight monetary policy) precipitated our recent growth slowdown.

Was 2017-18 a bad year for economic activity? According to the NSS data, real per capita consumption declined by 3.7 per cent between 2011-12 and 2017-18. This is almost unheard of in most mature economies; even in our worst growth year in recent memory (1991 or 2009) per capita GDP growth declined by 0.5 per cent (1991) or increased by 2.5 per cent (2008). We strongly believe that a misdiagnosis of what happened in 2017-18, or in 2019, can lead to faulty policy prescriptions. As it happens, 2017-18 was a very good year for economic activity. The night lights data consistently find 2017-18 to be the best year for economic activity in the last seven years.

Opinion | Economic growth in 2020 will be higher than in 2019 because structural reform will start paying off

We have attempted to construct an alternate consumption series for 2017-18 using various sources of data. Rice, wheat and cereal production (accounting for about 8 per cent of the consumption basket in 2011-12) shows an average per capita annual decline of 0.02 per cent between 2011-2017. But, per capita consumption of meat, eggs, pulses, edible oils, and even turmeric shows a healthy increase between 2011 and 2017. The food and tobacco consumption components — these account for 42 per cent of the consumption basket — show an annual real per capita increase of 2.6 per cent over 2011-12.

For an additional 27 per cent of expenditure (TV, internet, laptops, petrol, electricity, education, health, and airline travel) there is an annual per capita increase of 5.7 per cent. Overall, data for about 75 per cent of expenditure shows a 3.5 per cent annual increase in per capita consumption (this contrasts with about a 4 per cent annual increase according to national accounts). It is unlikely that the remaining items would have grown at less than the average rate of growth of the 75 per cent items included here. At the end, we just might be reaching the conclusion that the national account estimates of consumption and GDP growth have been fairly accurate.

Our analysis has implications for poverty analysis and for the analysis of policies that the Modi government has followed. Our very conservative estimate is that absolute poverty in 2017-18 was in the low to mid-single digits — a decline of 6-8 percentage points from the 14 per cent level in 2011-12. This is indeed a happy note as we celebrate 70 years of the creation of the Indian Republic.

This article first appeared in the print edition on January 25, 2020 under the title “Separating fact from economic fiction”. Bhalla is executive director, IMF representing India, Sri Lanka, Bangladesh and Bhutan. Karan Bhasin is an independent economist. Views are personal.

https://indianexpress.com/article/o...-growth-5-trillion-nirmala-sitharman-6234056/

 

[ezsasa]

Both these guys are pro govt economic commentators so have to view their analysis with pinch of salt

Separating fact from economic fiction: Growth slowed beyond expectations starting late 2018
Our very conservative estimate is that absolute poverty in 2017-18 was in the low to mid-single digits — a decline of 6-8 percentage points from the 14 per cent level in 2011-12. This is indeed a happy note as we celebrate 70 years of the creation of the Indian Republic.

Written by Surjit S Bhalla , Karan Bhasin | Updated: January 25, 2020 11:40:37 am

Some political economy experts believe that demonetisation is responsible for the 2019 slowdown, while others believe that the GDP data are flawed because it does not adequately capture informal sector activity.

If politics is mixed with economics, and the two are combined with ideology, then what we have is what can be called a “potent” mixture. That is the case today with discussions on the Indian economy.

We belong to the camp which believes that GDP growth was 7 per cent for the first five years of the Narendra Modi government, and that growth has fallen woefully short of predictions, and expectations, to 5 per cent in 2019-20. This is an unprecedented fall in a non-crisis year and all experts who were arguing for a tight monetary and fiscal policy should ask themselves where they went wrong.

While this soul-searching is going on, we want to address the confusion that has erupted because of the steep slide in GDP growth in 2019-20. Many commentators have conflated two distinct episodes and are presenting them as one. Their contention is that the recent slowdown has been a permanent fixture of the Indian economy, especially since Modi took over the reins in 2014. Some experts say that India is already back to its pre-liberalisation era of slow economic growth of around 3-5 per cent.

Opinion | As the Republic turns 70, the nation’s growth prospects seem fraught

Now, couple this with the fact that the Modi government has dumped the NSS consumer expenditure survey for 2017-18. Incidentally, we are in full agreement with the decision to treat the report with the disdain it deserves. But, we are not in agreement with the decision to not release the unit-level data. The unit-level data must be released, if only to document the reality that there is something wrong with the NSS architecture in collecting data.

We believe that the truth is hidden somewhere in the muddled data, and that the responsibility of a good researcher is to extract information from the noise. Towards this end, we bring a diverse set of statistical facts to the table — from night lights data, to national accounts, to data brought out by organisations on TV sales, internet subscriptions, automobile sales, and airline passengers.

Is 2019 different from the 2014-2018 period? A resounding yes, according to the night lights data. The nightlights data is available with the Earth Observation Group at the National Oceanic and Atmospheric Administration. It comprises low-light imaging data collected by satellites and filtered to measure the quantity of artificial (human-generated) light in an area. The data enabled us to capture economic activity between 2012 and 2017. Data for the first four months of the first four years (for 2019, data is only available till April) shows an average growth of 12.5 per cent per year; growth for the first two quarters (January to June) between 2014 and 2018 averages 7.1 per cent annually. In the first two quarters of the 2019 calendar year, GDP growth averaged 5.4 per cent, while night lights averaged 5.8 per cent. Both very distinct measures of economic activity suggest that 2019 was a bad year and that the prior years had significantly higher economic activity.

Some political economy experts believe that demonetisation is responsible for the 2019 slowdown, while others believe that the GDP data are flawed because it does not adequately capture informal sector activity. The months immediately following demonetisation (November-January) do show an average growth of minus 20 per cent, while over the next 16 months, growth averaged 23 per cent. This strongly indicates that something happened to cause growth to sharply decelerate in late 2018. But, it was not demonetisation or GST. We believe the evidence is supportive of the argument that the ultra-tight monetary policy followed by the Urjit Patel-Viral Acharya duo and the NBFC crisis (exaggerated by tight monetary policy) precipitated our recent growth slowdown.

Was 2017-18 a bad year for economic activity? According to the NSS data, real per capita consumption declined by 3.7 per cent between 2011-12 and 2017-18. This is almost unheard of in most mature economies; even in our worst growth year in recent memory (1991 or 2009) per capita GDP growth declined by 0.5 per cent (1991) or increased by 2.5 per cent (2008). We strongly believe that a misdiagnosis of what happened in 2017-18, or in 2019, can lead to faulty policy prescriptions. As it happens, 2017-18 was a very good year for economic activity. The night lights data consistently find 2017-18 to be the best year for economic activity in the last seven years.

Opinion | Economic growth in 2020 will be higher than in 2019 because structural reform will start paying off

We have attempted to construct an alternate consumption series for 2017-18 using various sources of data. Rice, wheat and cereal production (accounting for about 8 per cent of the consumption basket in 2011-12) shows an average per capita annual decline of 0.02 per cent between 2011-2017. But, per capita consumption of meat, eggs, pulses, edible oils, and even turmeric shows a healthy increase between 2011 and 2017. The food and tobacco consumption components — these account for 42 per cent of the consumption basket — show an annual real per capita increase of 2.6 per cent over 2011-12.

For an additional 27 per cent of expenditure (TV, internet, laptops, petrol, electricity, education, health, and airline travel) there is an annual per capita increase of 5.7 per cent. Overall, data for about 75 per cent of expenditure shows a 3.5 per cent annual increase in per capita consumption (this contrasts with about a 4 per cent annual increase according to national accounts). It is unlikely that the remaining items would have grown at less than the average rate of growth of the 75 per cent items included here. At the end, we just might be reaching the conclusion that the national account estimates of consumption and GDP growth have been fairly accurate.

Our analysis has implications for poverty analysis and for the analysis of policies that the Modi government has followed. Our very conservative estimate is that absolute poverty in 2017-18 was in the low to mid-single digits — a decline of 6-8 percentage points from the 14 per cent level in 2011-12. This is indeed a happy note as we celebrate 70 years of the creation of the Indian Republic.

This article first appeared in the print edition on January 25, 2020 under the title “Separating fact from economic fiction”. Bhalla is executive director, IMF representing India, Sri Lanka, Bangladesh and Bhutan. Karan Bhasin is an independent economist. Views are personal.

https://indianexpress.com/article/o...-growth-5-trillion-nirmala-sitharman-6234056/

These days I am coming to an conclusion that almost all the economists who in news are experts on consumption or in other words experts on spending money.

What we need now are more number of economists who are experts on making money by creating newer avenues of growth.

 

[Holy Triad]

Offtopic:


A short wsj video on how global trade runs on murican dollar and how some countries are trying to bypass the murican banks.(indo-iran transaction was mentioned here as an example)

Interesting,worth a watch

 

[sorcerer]

‘Rs 1k cr foreign assets of hotel group detected’ - Times of India

https://timesofindia.indiatimes.com...hotel-group-detected/articleshow/73598025.cms