Indian Economy: News and Discussion

[Tejbrahmastra]

Is India the World’s Next Great Economic Power?

Is India’s economic rise inevitable? There’s good reason to think that this latest round of Indo-optimism might be different than previous iterations, but the country still has major challenges to address to make good on this promise. In terms of drivers, demand — in the form of a consumer boom...

hbr.org

 

[Bharatiya]

Informed members here, what's your take on this?

A guy on twitter @ThatIndicGuy claims that Indian economy won't be able to hit $3.75 Trillion as projected because our Q1'23 GDP was $860 Billion. It was apparently supposed to be higher, but the currency depreciation acted up and ate into the gains.

Average rate in 2022: 78.6/$ in 2023: 82.2/$.

I know exports are slowing down because of the global situation. But at least if the rupee had remained stable, the growth would have been appreciable. The currency depreciated horrendously, by a whopping 4.5%.

 

[sauntheninja]

Informed members here, what's your take on this?

A guy on twitter @ThatIndicGuy claims that Indian economy won't be able to hit $3.75 Trillion as projected because our Q1'23 GDP was $860 Billion. It was apparently supposed to be higher, but the currency depreciation acted up and ate into the gains.

Average rate in 2022: 78.6/$ in 2023: 82.2/$.

View attachment 221596

I know exports are slowing down because of the global situation. But at least if the rupee had remained stable, the growth would have been appreciable. The currency depreciated horrendously, by a whopping 4.5%.

Question?

Are projections claiming we will be a 5 trillion dollar economy till x date do they take currency deprecating into account.

 

[Bharatiya]

Question?

Are projections claiming we will be a 5 trillion dollar economy till x date do they take currency deprecating into account.

Yes. Currency depreciation is considered in all projections. A few months ago, there was a report that India would hit $5 T in 2029 (iirc), but it was advanced by 2 years later on, mainly because the projection of currency depreciation they considered for the report changed.

 

[Hari Sud]

Informed members here, what's your take on this?

A guy on twitter @ThatIndicGuy claims that Indian economy won't be able to hit $3.75 Trillion as projected because our Q1'23 GDP was $860 Billion. It was apparently supposed to be higher, but the currency depreciation acted up and ate into the gains.

Average rate in 2022: 78.6/$ in 2023: 82.2/$.

View attachment 221596

I know exports are slowing down because of the global situation. But at least if the rupee had remained stable, the growth would have been appreciable. The currency depreciated horrendously, by a whopping 4.5%.

That guy has to be Chinese or Pakistani.

 

[Bharatiya]

That guy has to be Chinese or Pakistani.

Perhaps he is. But the numbers are official. So is the exchange rate.

Addressing the issue instead of the person will help us make a strong argument.

Even if it's bad news, it's not a problem to say it out. Since this is the economic thread, I think this issue should be talked about more extensively. If you know something about this Q1 issue, do share.

 

[RedHood108]

Informed members here, what's your take on this?

A guy on twitter @ThatIndicGuy claims that Indian economy won't be able to hit $3.75 Trillion as projected because our Q1'23 GDP was $860 Billion. It was apparently supposed to be higher, but the currency depreciation acted up and ate into the gains.

Average rate in 2022: 78.6/$ in 2023: 82.2/$.

View attachment 221596

I know exports are slowing down because of the global situation. But at least if the rupee had remained stable, the growth would have been appreciable. The currency depreciated horrendously, by a whopping 4.5%.

According to IMF data India is already a 3.74 Trillion $ economy as of 2023.

In 2024 India would be a 4.06 Trillion $ economy. If we achieve an annual growth rate of 6.1% for the year 2023-24 as projected by IMF.

And We would cross 5 Trillion $ mark by mid 2026 which will show up in our 2027 data. The year we cross both Japan & Germany.

And they do take into account currency depreciation.

As long as the Yearly growth rate projection are met we may not face any issues, Q1 data was a bit lower owing to high Repo rate, considering the inflation is getting in control. RBI might lower the rates in subsequent months. Which will help to recover the Q1 loss.

 

[Bharatiya]

According to IMF data India is already a 3.74 Trillion $ economy as of 2023.
View attachment 221605
In 2024 India would be a 4.06 Trillion $ economy. If we achieve an annual growth rate of 6.1% for the year 2023-24 as projected by IMF.

And We should be able to cross 5 Trillion $ mark by mid 2026 which will show up in our 2027 data. The year we cross both Japan & Germany.
View attachment 221606
And they do take into account currency depreciation.

The gdp of $3.75 for the current financial year, 2023-24—which if was true, then we should have a quarter GDP greater than $900 Billion (around $930 B). But we have $860 Billion. We had around $830 Billion in Q1 last year and that kinda translated to $3.2 Trillion or something.

Quarterly GDP change, of course, but not too wildly. So, if purely take the government numbers, we would fall short of $3.75 Trillion. Maybe we'll hit $3.5 Trillion.

I'm not sure which year IMF is referring to, but regardless, a $860 B GDP for Q1 doesn't equate to a $3700 Billion economy.

If I'm missing something, please inform me. I hope I'm wrong here.

 

[thebakofbakchod]

That guy has to be Chinese or Pakistani.

Bruh he is literally one of the biggest posters here. Nothing wrong with what he wrote. Q1 growth was in the lower bound of predictions and below expectations.

 

[sauntheninja]

Perhaps he is. But the numbers are official. So is the exchange rate.

Addressing the issue instead of the person will help us make a strong argument.

Even if it's bad news, it's not a problem to say it out. Since this is the economic thread, I think this issue should be talked about more extensively. If you know something about this Q1 issue, do share.

This all happens because of how shit our government is at collecting data.

 

[Bharatiya]

Bruh he is literally one of the biggest posters here. Nothing wrong with what he wrote. Q1 growth was in the lower bound of predictions and below expectations.

@ThatIndicguy is a member here?

 

[Bharatiya]

This all happens because of how shit our government is at collecting data.

That's a separate issue altogether. This projection of $3.75 T was made despite those data collection problems, not in a scenario without them.

 

[Bharatiya]

Last two years data.

We bounced back well from Covid. So, a massive growth. But once the bounce back was over, the fluctuation isn't that high.

I haven't looked at the Quarterly GDPs of last 10 years to make a more educated observation, but if you observe the quarters of last year alone, GDP has at most fluctuated around 5,00,000 crore, which is around $60 Billion.

But the problem, to put it simply: (2023-24)
Q1: 70 Lakh Crore = $860 B
Q2: 70 Lakh Crore = $860 B (6% growth YOY)
Q3: 70 Lakh Crore = $860 B (0% growth YOY)
Q4: 70 Lakh Crore = $860 B (0% growth YOY)

We'd be staring at $3.44 Trillion.

Let's say, we did grow strongly in coming quarters.

Q1: 70 Lakh Crore = $860 B
Q2: 75 Lakh Crore = $910 B
Q3: 75 Lakh Crore = $910 B
Q4: 75 Lakh Crore = $910 B

It'd be $3.6 Trillion

Even more optimistic?

Q1: 70 Lakh Crore = $860 B
Q2: 80 Lakh Crore = $970 B
Q3: 80 Lakh Crore = $970 B
Q4: 80 Lakh Crore = $970 B

Now that would actually total $3.77 Trillion — the projected GDP!

But this implies:
Q2 grows 23% growth YOY.
Q3 grows 14% growth YOY
Q4 also grows 14% YOY.

Sorry if this came out as a rant, but I'm not sure what I'm missing.

 

[RedHood108]

The gdp of $3.75 for the current financial year, 2023-24—which if was true, then we should have a quarter GDP greater than $900 Billion (around $930 B). But we have $860 Billion. We had around $830 Billion in Q1 last year and that kinda translated to $3.2 Trillion or something.

Quarterly GDP change, of course, but not too wildly. So, if purely take the government numbers, we would fall short of $3.75 Trillion. Maybe we'll hit $3.5 Trillion.

I'm not sure which year IMF is referring to, but regardless, a $860 B GDP for Q1 doesn't equate to a $3700 Billion economy.

If I'm missing something, please inform me. I hope I'm wrong here.

The Indian GDP hit 3.75 Trillion $ mark in last Quarter of 2022-23, so it is already achieved. What ever GDP India achieves in Q1 2023 affect the annual GDP data of next year.

We consider 3.75 trillion as the GDP for 2023 as it is the base year for 2024 calculations. In 2024, 4.06 Trillion $ should be the base. So the GDP achieved in 2023 will only be counted in 2024 as base year.

The Q1 GDP growth rate is calculated on the Q4 of 2022 (Jan-Mar). And any growth rate we achieve in next quarter ie (July-Sep) will be on the data of Q1 (April-June).

So the data of 850 Billion $ in Q1 is only going to increase. It is not a linear 4× multiplication.

 

[Tejbrahmastra]

View attachment 221607
Last two years data.

We bounced back well from Covid. So, a massive growth. But once the bounce back was over, the fluctuation isn't that high.

I haven't looked at the Quarterly GDPs of last 10 years to make a more educated observation, but if you observe the quarters of last year alone, GDP has at most fluctuated around 5,00,000 crore, which is around $60 Billion.

But the problem, to put it simply: (2023-24)
Q1: 70 Lakh Crore = $860 B
Q2: 70 Lakh Crore = $860 B (6% growth YOY)
Q3: 70 Lakh Crore = $860 B (0% growth YOY)
Q4: 70 Lakh Crore = $860 B (0% growth YOY)

We'd be staring at $3.44 Trillion.

Let's say, we did grow strongly in coming quarters.

Q1: 70 Lakh Crore = $860 B
Q2: 75 Lakh Crore = $910 B
Q3: 75 Lakh Crore = $910 B
Q4: 75 Lakh Crore = $910 B

It'd be $3.6 Trillion

Even more optimistic?

Q1: 70 Lakh Crore = $860 B
Q2: 80 Lakh Crore = $970 B
Q3: 80 Lakh Crore = $970 B
Q4: 80 Lakh Crore = $970 B

Now that would actually total $3.77 Trillion — the projected GDP!

But this implies:
Q2 grows 23% growth YOY.
Q3 grows 14% growth YOY
Q4 also grows 14% YOY.

Sorry if this came out as a rant, but I'm not sure what I'm missing.

You are calculating current GDP or Nominal GDP based on latest exchange rates, while the real GDP is usually calculated from a reference point. For now, India's reference point is 2011. WRT that, India's Q1 would be around 43Lakh Cr, while the exchange rate at that time was around Rs44.So close to the 950 billion mark.

And if you want to calculate the Nominal GDP, then inflation will also have to be added. It may also be possible that by next yr, the Rupee strengths to Rs80, so then the GDP will change again.
That's why nominal is not a very good measure. We wont be able to get the exact GDP because of inflation, exchange rate fluctuation etc!!

 

[Bharatiya]

The Indian GDP hit 3.75 Trillion $ mark in last Quarter of 2022-23, so it is already achieved. What ever GDP India achieves in Q1 2023 affect the annual GDP data of next year.

We consider 3.75 trillion as the GDP for 2023 as it is the base year for 2024 calculations. In 2024, 4.06 Trillion $ should be the base. So the GDP achieved in 2023 will only be counted in 2024 as base year.

The Q1 GDP growth rate is calculated on the Q4 of 2022 (Jan-Mar). And any growth rate we achieve in next quarter ie (July-Sep) will be on the data of Q1 (April-June).

So the data of 850 Billion $ in Q1 is only going to increase. It is not a linear 4× multiplication.

If it has hit $3.75 T already, the numbers of 2022-23 Quarters should back it up. They aren't adding up.

Q1 is 70.66 Lakh Crores. (2023)
Q4 is 71.81 Lakh Crores (2022).

If Quarter growth was calculated from previous quarters, it'd have been negative.

Instead, we had a 7.8% growth or 8% growth which means it's by YOY Quarter.
Q1: 70.66 Lakh Crores (2023-24)
Q1: 65.41 Lakh Crores (2022-23)

Only this actually gives 8% growth that is spoken by everyone.

 

[RedHood108]

If it has hit $3.75 T already, the numbers of 2022-23 Quarters should back it up. They aren't adding up.

Q1 is 70.66 Lakh Crores. (2023)
Q4 is 71.81 Lakh Crores (2022).

If Quarter growth was calculated from previous quarters, it'd have been negative.

Instead, we had a 7.8% growth or 8% growth which means it's by YOY Quarter.
Q1: 70.66 Lakh Crores (2023-24)
Q1: 65.41 Lakh Crores (2022-23)

Only this actually gives 8% growth that is spoken by everyone.

Ok, so it y-o-y quarterly growth. So then it seems fine though.

 

[RedHood108]

If it has hit $3.75 T already, the numbers of 2022-23 Quarters should back it up. They aren't adding up.

Q1 is 70.66 Lakh Crores. (2023)
Q4 is 71.81 Lakh Crores (2022).

If Quarter growth was calculated from previous quarters, it'd have been negative.

Instead, we had a 7.8% growth or 8% growth which means it's by YOY Quarter.
Q1: 70.66 Lakh Crores (2023-24)
Q1: 65.41 Lakh Crores (2022-23)

Only this actually gives 8% growth that is spoken by everyone.

So I asked your question to GPT4 & this is the answer.

The quarterly GDP figures are usually expressed in real terms, meaning that they are adjusted for inflation and reflect the changes in the volume of goods and services produced. The annual GDP figures are usually expressed in nominal terms, meaning that they are not adjusted for inflation and reflect the changes in the prices of goods and services produced. Therefore, there may be variations between the sum of the quarterly GDP and the annual GDP.

 

[FalconSlayers]

@ThatIndicguy is a member here?

Yes, that's me.

Informed members here, what's your take on this?

A guy on twitter @ThatIndicGuy claims that Indian economy won't be able to hit $3.75 Trillion as projected because our Q1'23 GDP was $860 Billion. It was apparently supposed to be higher, but the currency depreciation acted up and ate into the gains.

Average rate in 2022: 78.6/$ in 2023: 82.2/$.

View attachment 221596

I know exports are slowing down because of the global situation. But at least if the rupee had remained stable, the growth would have been appreciable. The currency depreciated horrendously, by a whopping 4.5%.

I'm not claiming anything, that's the truth, our Q1 GDP is roughly the same as last year in nominal USD terms.

That guy has to be Chinese or Pakistani.

The Indian GDP hit 3.75 Trillion $ mark in last Quarter of 2022-23, so it is already achieved. What ever GDP India achieves in Q1 2023 affect the annual GDP data of next year.

We consider 3.75 trillion as the GDP for 2023 as it is the base year for 2024 calculations. In 2024, 4.06 Trillion $ should be the base. So the GDP achieved in 2023 will only be counted in 2024 as base year.

The Q1 GDP growth rate is calculated on the Q4 of 2022 (Jan-Mar). And any growth rate we achieve in next quarter ie (July-Sep) will be on the data of Q1 (April-June).

So the data of 850 Billion $ in Q1 is only going to increase. It is not a linear 4× multiplication.

That never happened, it was just an estimate made by IMF.

 

[Bharatiya]

Yes, that's me.

I'm not claiming anything, that's the truth, our Q1 GDP is roughly the same as last year in nominal USD terms.



That never happened, it was just an estimate made by IMF.

It's you! Thanks for responding. From the basics I understand, it is indeed discouraging. But that's more because of depreciation than GDP not growing. And inflation is dead this quarter. Maybe it'll pick up in the next.

If you don't mind, can you explain this?

The quarterly GDP figures are usually expressed in real terms, meaning that they are adjusted for inflation and reflect the changes in the volume of goods and services produced. The annual GDP figures are usually expressed in nominal terms, meaning that they are not adjusted for inflation and reflect the changes in the prices of goods and services produced. Therefore, there may be variations between the sum of the quarterly GDP and the annual GDP.

And this:

You are calculating current GDP or Nominal GDP based on latest exchange rates, while the real GDP is usually calculated from a reference point. For now, India's reference point is 2011. WRT that, India's Q1 would be around 43Lakh Cr, while the exchange rate at that time was around Rs44.So close to the 950 billion mark.

And if you want to calculate the Nominal GDP, then inflation will also have to be added. It may also be possible that by next yr, the Rupee strengths to Rs80, so then the GDP will change again.
That's why nominal is not a very good measure. We wont be able to get the exact GDP because of inflation, exchange rate fluctuation etc!!

I did a quick check for last year's numbers. They're giving around $3.45 Trillion GDP of 2022-23 (avg. rate: 78.6/$).

So, I'm confused at this point. Because IMF numbers are projections and govt numbers are reports.