The Outsider Posted June 1, 2015 Share Posted June 1, 2015 @amiret yes lets wait. I think there is a degree of mumbo jumbo in the new GDP figures. I am not going to deny that. @outsider cant disagree. All we have to do is wait. But i think we can all agree that the economy is improving. The degree to which it is improving is up for debate. We have to keep in mind that the absolute GDP has not changed. Clearly with a fall in oil prices (which is India's second largest import and impacts inflation) it was going to boost GDP growth by 1-2%. Thats rudimentary economics. With rate cuts going to come I feel in a few years India will be a solidly 8% plus economy. So if you say the indian economy grew by 4.7% in 2013-2014 as per the old figures. With the dip in oil and improvement in macro economic situation + rate cuts which have already taken place i think its fair to assume that the Indian economy is in the 6.5%-7% zone say for 2014-2015. http://www.economist.com/news/international/21627642-america-and-its-friends-benefit-falling-oil-prices-its-most-strident-critics Many economists are saying that the dip in oil prices have added about 2% growth to the Indian GDP. With a combined effects of rate cuts (inflation falling) better fiscal deficit and macro indicators. Lets also keep in mind the price of another commodity which India imports a lot gold has also fallen on average from 2013-2014 and other key commodities like Copper Aluminium have also fallen. I have no idea how you are coming up with that extrapolation. For starters, can you please explain how a drop in oil prices necessarily equates to a 1-2% growth in GDP? Link to comment Share on other sites More sharing options...
Texan Posted June 2, 2015 Share Posted June 2, 2015 Even Modi cheer girls like Surjeet Bhalla have zero faith in the GDP figures. It is laughable and embarrassing that a country is unable to calculate its GDP numbers using a method where the rest of the world is comfortable with the calculation. And yet, both IMF and World Bank have pegged India's growth rate at 7.5% for 2015 and higher in 2016. Link to comment Share on other sites More sharing options...
amiret Posted June 2, 2015 Share Posted June 2, 2015 A Must read article in today's financial express : As we await the 10 year quaterly history from CSO of GDP components, based on new method, to be able to make historical trend analyis, one cannot help but express bewilderment at the trend of GDP in the new series. If we jog our memory on economic growth in India post 2008 meltdown, we find that economic growth had rebounded very strongly during the years of 2009 and 2010 and it was evident in various surveys and even many anecdotal evidences. The global co-ordinated monetary and fiscal pump priming had caused a significant jump in global and Indian economic growth. In India, growth started to roll over in 2011, as effects of stimulus began to wane. Therefore, one can easily conclude that almost all of the key economic indicators in India would show a peak growth during 2010-11. Infact, it was the case in GDP old series. At the same time, economic growth showed signs of bottoming sometime last year. Therefore, a trend analysis of GDP growth should paint a picture where growth rate peaked between 2010-2011 and then troughed somewhere around 2014. However, what we find in the new series is exact opposite. In the new series of GDP, growth troughed in 2011 and surged to its peak last year. How can a trend of GDP be so baffling that it follows a path which is divergent to true economic performance. http://www.financialexpress.com/article/economy/bewildering-trend-of-gdp-in-the-new-series/78975/ Link to comment Share on other sites More sharing options...
amiret Posted June 2, 2015 Share Posted June 2, 2015 This is what is relevant to the ordinary investors : The Q4FY15 earnings season has been a wake-up call for analysts with corporate India posting its worst results in several years, a performance that is completely out of sync with what has been billed an an improving macroeconomic environment. Next year earnings estimates have also been downgraded . With most companies turning out numbers way below estimates, analysts have had little choice but to downgrade earnings estimates for FY16. In November last year, the EPS forecast for the Sensex was Rs 1,903 but that number has now been cut sharply to just Rs 1,763, putting the earnings growth for this year at just 15%, and that too on a much smaller base. http://www.financialexpress.com/article/economy/anaemic-numbers-earn-india-inc-a-downgrade/78947/?SocialMedia Link to comment Share on other sites More sharing options...
G_B_ Posted June 2, 2015 Share Posted June 2, 2015 I have no idea how you are coming up with that extrapolation. For starters, can you please explain how a drop in oil prices necessarily equates to a 1-2% growth in GDP? lets see a. it reduces indias import bill improving current account deficit. this leads to less pressures on the rupee. In the space of a year India's CAD went from about 5% during the highs of FY2012 of to less than -1.5% of GDP for FY 2015. Which is a big jump. b. it reduces inflation. this in turn causes rate cuts. boosting natural growth Edit:Rajan has just cut the repo rate by 0.25% today an hour or so ago. Each rate cut of 0.25% such as this is expected to add about 0.25- 0.5% to the GDP growth. In FY year 2014-2015 i do believe Rajan made two rate cuts of 0.25%. c. it has a knockon effect of reducing the price of other commodities. Ie it acts as a global barometer for commodity prices. India is also a major importer of other commodities. d. it reduces fiscal deficit in our budget. This allows our government to boost say spending in other areas such as infrastructure. oil fell from highs of 115 to 45 during the financial year 2014-2015 before stabilising in the 60s. As per many agencies and banks a $10 fall in oil leads to a 0.1-0.2% extra growth in india in terms of direct growth. In addition there are indirect benefits such as sentiment (more FDI inflows etc) lastly in econometric terms gdp growth is a difference stationary process. whereby shocks to the gdp growth equation are permanent. when u say extapolation what exactly do u mean. As gdp growth is a non stationary variable i need to know what sort of extapolation u are talking about. Link to comment Share on other sites More sharing options...
G_B_ Posted June 2, 2015 Share Posted June 2, 2015 and as i said before, i think India grew in FY2015 by 7.3% as per the finance ministry I would cut between 0.5% to 1% for the real growth rate. So a quote of 6.3% to 6.7% should cover the bases. Anything below that IMO ignores the immense gains from a drop in global oil prices (and all the indriect benefits such as rate cuts) and a general upward trend in the GDP. Edit: It appears the government will probably revise downwards the Q4 numbers as more companies file in their numbers. Based on twitter from the people I follow many are saying 6.6% should be the true growth rate for Fy2015 based on a revision. Which is fair. http://timesofindia.indiatimes.com/business/india-business/7-5-Q4-GDP-growth-may-be-revised-downward-on-poor-corporates-numbers/articleshow/47507828.cms Link to comment Share on other sites More sharing options...
G_B_ Posted June 2, 2015 Share Posted June 2, 2015 India cuts interest rates for a third time this year The Reserve Bank of India (RBI) has cut interest rates for the third time this year to help boost growth in Asia's third largest The central bank cut its key repo rate to 7.25% from 7.50%, as widely expected, after taking similar moves in January and March this year. The repo rate is the level at which the central bank lends to commercial banks. http://www.bbc.co.uk/news/business-32970489 as per most speculation and estimates the final rate cut of 0.25% basis points is expected to be on 4th of August if at all. Before Rajan shuts up shop for a while. Link to comment Share on other sites More sharing options...
mishra Posted June 2, 2015 Share Posted June 2, 2015 This is what is relevant to the ordinary investors : Next year earnings estimates have also been downgraded . http://www.financialexpress.com/article/economy/anaemic-numbers-earn-india-inc-a-downgrade/78947/?SocialMedia ^ EPS means nothing without P/E. The economist hasnt even talked about that. Also even then you cant conclusively say anything as that figure further diluted by investor confidenceand hence Share price may be inflated/deflated? My understanding is correct? Right? Link to comment Share on other sites More sharing options...
The Outsider Posted June 2, 2015 Share Posted June 2, 2015 lets see a. it reduces indias import bill improving current account deficit. this leads to less pressures on the rupee. In the space of a year India's CAD went from about 5% during the highs of FY2012 of to less than -1.5% of GDP for FY 2015. Which is a big jump. b. it reduces inflation. this in turn causes rate cuts. boosting natural growth Edit:Rajan has just cut the repo rate by 0.25% today an hour or so ago. Each rate cut of 0.25% such as this is expected to add about 0.25- 0.5% to the GDP growth. In FY year 2014-2015 i do believe Rajan made two rate cuts of 0.25%. c. it has a knockon effect of reducing the price of other commodities. Ie it acts as a global barometer for commodity prices. India is also a major importer of other commodities. d. it reduces fiscal deficit in our budget. This allows our government to boost say spending in other areas such as infrastructure. oil fell from highs of 115 to 45 during the financial year 2014-2015 before stabilising in the 60s. As per many agencies and banks a $10 fall in oil leads to a 0.1-0.2% extra growth in india in terms of direct growth. In addition there are indirect benefits such as sentiment (more FDI inflows etc) lastly in econometric terms gdp growth is a difference stationary process. whereby shocks to the gdp growth equation are permanent. when u say extapolation what exactly do u mean. As gdp growth is a non stationary variable i need to know what sort of extapolation u are talking about. GDP is a measure of production. Some of the factors listed above do not effect production directly. Agriculture forms around 20% of India's GDP and grew at 0.2%. This means that the rest of the sectors grew at 9.25%. That level of growth looks completely different on the ground and in terms of other indicators. http://www.business-standard.com/article/current-affairs/india-inc-s-sales-profit-growth-weakest-in-2-yrs-115060100033_1.html Look at the profit and sales numbers in the above article for example. A drop in profit and a 6% growth in sales is not reflective of an economy growing at 9.25% (taking that figure since agriculture is irrelevant to most companies) or even 7.5%. The article also mentions historical figures associated with such growth has been 15% revenue and 20% profit growth. By extrapolation I meant comparison of the old and new methods of calculating GDP. 4.7% of the old method was equivalent to 6.9% of the new in 2014. How can 7.4% of the new method in 2015 be equivalent to 6.5-7% of the old as you are claiming? Link to comment Share on other sites More sharing options...
amiret Posted June 2, 2015 Share Posted June 2, 2015 ^ EPS means nothing without P/E. I am not sure what you mean by this . P/E is the multiple at which the stock or index trades at. P/E fluctuates based on the index/stock price movements . The article is talking about Net Profits of companies NOT share prices quoted in the market. FACT : Corporates have reported lower profits (as mentioned above). Next year's forecasts have also been downgraded . The economist hasnt even talked about that. next year's forecasts reported in that article are based on Bloomberg consensus estimates . The current trailing or forward P/E can be calculated by us . It is the EPS figure which we need . For eg. Sensex EPS forecast for next year is 1763 ,based on today's closing price the sensex is trading at a P/E of 15.4 times Fy16 forecasted earnings . Also even then you cant conclusively say anything as that figure further diluted by investor confidenceand hence Share price may be inflated/deflated? Last Qtr and year EPS figures are based on Audited figures reported by companies. Again the article is talking about Net Profits of companies NOT share prices quoted in the market. Link to comment Share on other sites More sharing options...
G_B_ Posted June 2, 2015 Share Posted June 2, 2015 GDP is a measure of production. Some of the factors listed above do not effect production directly. Agriculture forms around 20% of India's GDP and grew at 0.2%. This means that the rest of the sectors grew at 9.25%. That level of growth looks completely different on the ground and in terms of other indicators. http://www.business-standard.com/article/current-affairs/india-inc-s-sales-profit-growth-weakest-in-2-yrs-115060100033_1.html Look at the profit and sales numbers in the above article for example. A drop in profit and a 6% growth in sales is not reflective of an economy growing at 9.25% (taking that figure since agriculture is irrelevant to most companies) or even 7.5%. The article also mentions historical figures associated with such growth has been 15% revenue and 20% profit growth. By extrapolation I meant comparison of the old and new methods of calculating GDP. 4.7% of the old method was equivalent to 6.9% of the new in 2014. How can 7.4% of the new method in 2015 be equivalent to 6.5-7% of the old as you are claiming? In 2012-2013 Agriculture was 13.7% of GDP http://articles.economictimes.indiatimes.com/2013-08-30/news/41618996_1_gdp-foodgrains-allied-sectors Its probably fallen a lot more since. If i had to make a guess its about 12% of GDP, maybe even less wont be surprised if 10% with the new base year. I think the 4.7% was always going to be revised upwards. I agree that it was not 6.9%. Those numbers I disagree with as well. As per most economists it would have been in line to be revised upwards to about 5.1%. Similarly this 7.3% growth will be revised downwards to about IMO 6.3-6.7%. With many on twitter claiming it should be about 6.6% Now if we consider the the difference between 5.1% and 6.6% that 1.5% increase in between can be explained by the fall in oil prices and rate cuts and the general improvement in Indian macroeconomic conditions. While corporate growth is sluggish to say the least as have exports. There has been growth in FDI and other areas to explain this growth. Its not just India mind you, every South Asian nation has seen a healthy increase in its GDP growth rates due to a fall in oil. The region as a whole has seen a good bounce. http://www.worldbank.org/en/news/press-release/2014/10/06/led-india-south-asia-economic-growth-accelerate India has had a bigger bounce because oil forms a bigger % of our imports. Link to comment Share on other sites More sharing options...
mishra Posted June 2, 2015 Share Posted June 2, 2015 ^ Got the point. Cheers! Could it be attributed to rupee being stronger. I remember that during last year of MMS era i was consistently getting over Rs 100 per pound on my remittances. I am still not convinced that a reduction in forecasted NET profit is bad thing as long as new jobs (i.e. expansion) are being added. Link to comment Share on other sites More sharing options...
amiret Posted June 2, 2015 Share Posted June 2, 2015 External Affairs Minister Sushma Swaraj : Prime Minister Narendra Modi raised "very strongly" the issue of the China-Pakistan economic corridor during his visit to Beijing and told them that it is "unacceptable", Answering queries at a press conference, she said the government had summoned the Chinese envoy over the $46 billion economic corridor that is to run through Pakistani Kashmir. "Prime minster during his visit took up the issue very firmly and spoke very strongly that the CPEC going through PoK (Pakistan-occupied Kashmir) is unacceptable," she said what was the Chinese response Sushmajee ? :hmmm: Link to comment Share on other sites More sharing options...
amiret Posted June 3, 2015 Share Posted June 3, 2015 NEW DELHI: This June 21, a 35-minute mass demonstration of 15 yoga asanas by 45,000 school children, government officials, diplomats, army personnel and NCC cadets, led by PM Narendra Modi himself at Rajpath will possibly lead to a record of sorts. The event has already been registered as an entry into the Guinness Book of World Records,.....if government sources are to be believed, every inch preparation to make the event a grand spectacle is directed at that. "The PM is insistent that the event makes an impact internationally," a government official said. An AYUSH official part of the inter-ministerial group organising the function said they were "trying very hard to get the record set but the rules of the world record are tough." Pradhan Drameybaaz at it again Forcing Govt officials to set Guiness world records , :facepalm: http://economictimes.indiatimes.com/articleshow/47521366.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst Link to comment Share on other sites More sharing options...
G_B_ Posted June 3, 2015 Share Posted June 3, 2015 Australia, New Zealand back Japan's regional trade pact to bat for FDI in e-commerce in India NEW DELHI: Australia and New Zealand have joined Japan in trying to persuade India to open up its rapidly growing ecommerce sector, forecast to reach $300 billion by 2030, to overseas investment. Both countries have backed Japan's proposal to include e-commerce in the 16-nation regional trade pact that's being negotiated. Read more at: http://economictimes.indiatimes.com/articleshow/47507518.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst http://economictimes.indiatimes.com/topic/Regional-Cooperation-and-Economic-Partnership Link to comment Share on other sites More sharing options...
mishra Posted June 3, 2015 Share Posted June 3, 2015 Pradhan Drameybaaz at it again Forcing Govt officials to set Guiness world records , :facepalm: http://economictimes.indiatimes.com/articleshow/47521366.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst For gods sake, Apart from Non-violence day,Tell me which day in the world is celebrated because its source comes from India. Have some pride and share it with world. What is wrong in advertising Yoga? Yoga pants are allready in demand all over worls :angelic: Link to comment Share on other sites More sharing options...
amiret Posted June 3, 2015 Share Posted June 3, 2015 For gods sake' date=' Apart from Non-violence day,Tell me which day in the world is celebrated because its source comes from India. What is wrong in advertising Yoga? [u']Yoga pants are allready in demand all over worls :angelic: you have already given the answer . Yoga is already immensely popular . and it had nothing to do with having a special day or wasting Public money on some ridiculous event . In a recent meeting wherein the PM took stock of the preparations, he is said to have told bureaucrats not to worry about the budget Govt officials are not there to set Guiness world records . Who gives a damn about these silly records anyway ? This has very little to do with Yoga and more centered on the glorification of 1 man and inflating his already Bloated Ego . Link to comment Share on other sites More sharing options...
randomGuy Posted June 3, 2015 Share Posted June 3, 2015 Having World yoga day is better than world poetry day or English day #Justsaying Link to comment Share on other sites More sharing options...
asterix Posted June 3, 2015 Share Posted June 3, 2015 I agree with Amiret... Every now and then Modi or his event managers come up with a grand event... Looks like another drubbing awaits in Bihar, after Delhi... Link to comment Share on other sites More sharing options...
mishra Posted June 4, 2015 Share Posted June 4, 2015 Kolkata to Agartala via Dhaka. Modi connecting peoples. :hatsoff: http://www.thehindu.com/news/national/other-states/kolkata-to-agartala-via-bangladesh/article7274995.ece Soon, bus service from Kolkata to Agartala via Bangladesh Link to comment Share on other sites More sharing options...
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