t*******h
发帖数: 2882 | 1 http://www.atimes.com/atimes/South_Asia/LL18Df01.html
India's growth not all shine
By Kunal Kumar Kundu
BANGALORE - India's gross domestic product (GDP) figures for the second
quarter of its fiscal year surprised on the upside as year-on-year growth
was pegged at 8.9%. While the numbers are confidence boosting, it is
important to realize that there is a statistical element to the latest
number, while being very positive, rather than the data indicating a
substantial improvement in actual performance.
Readers may recall that very recently India revised the way official
inflation, as measured by the Wholesale Price Index (WPI), is calculated.
Under the new methodology, inflation turns out to be
lower than what it would have been under the old methodology. This adds a
positive deflator effect to the final GDP numbers.
In fact, the press release of the Ministry of Statistics & Programme
Implementation (MOSPI) shows that the year-on-year (YoY) GDP growth in the
fiscal first quarter has also been revised upward (from 8.8% to 8.9%), and
that is because of the deflator effect. Nevertheless, the deflator effect is
not very high. The bigger reason is quality of data dished out by the
government.
After the Q1 numbers were released on August 30, a hue and cry was raised by
economists (yours truly included) on the quality of the number given by the
government. While the GDP growth at factor cost (read production or income
side) was up by 8.8%, GDP growth at market price (read expenditure or demand
side) was up by a mere 3.7% - the second-lowest growth recorded under the
new series. That raised questions about the authenticity of the data itself.
Not only was the divergence of GDP growth under the two methods of
accounting more than 5% (an unprecedented event), it was clear that domestic
demand was faltering since the demand-side GDP was hardly budging. In such
a scenario, it was difficult to comprehend why production was cranking up in
the absence of demand.
The next day, the government acknowledged that their number was incorrect
and that they had used a wrong deflator. As a result, Q1 GDP by expenditure
side was revised upward substantially to a YoY growth of 10.3%. Within that,
growth in Private Final Consumption Expenditure (PFCE) or private
expenditure (read consumer demand) was also revised upward - from the
original growth rate of a mere 0.34% YoY to a revised rate of a very healthy
7.8% YoY.
It is important to note here that consumption expenditures account for more
than 55% of India's GDP. Hence, a slowdown in consumer demand (as was
reflected by the data) should have been a major concern. Which was why I was
of the opinion that the annual GDP growth rate would struggle to touch 8%.
Clearly, a wrong data set can lead to erroneous conclusions. In fact, the
following chart makes for interesting reading.
As can be seen, the initial data released on August 30 was substantially
understated as compared to the revised data released on September 1 and
November 30.
Now, assuming that the latest set of data is correct, there is increased
evidence that demand is better than what had been assumed earlier and is
actually holding up nicely. Hence, the 8.9% growth is understandable.
Under this circumstance, I am revising my growth forecast for the full
fiscal year upward to between 8.5% and 8.7%. While agriculture growth is
expected to hold on given the low base effect, I am expecting the industry
to slow down during the next two quarters.
Although the recently released Index of Industrial Production data for
October (showing a YoY growth of 10.76%, after being in low single digits in
the previous two months) buoyed the market, October is India's most
important festival month, the cranking up of production is not surprising.
However, the underlying weakness is quite evident. The three-month moving
average (3MMA) data indicates a clear slowdown since February last.
What is more worrying is the fall in capital goods production. Although it
recorded double digit growth in October, it was the lowest double digit
growth in more than a year.
In this regard, it is also important to note that inflation in India is
likely to remain at elevated levels (given the historical under investment
in the agriculture sector and high levels of commodity prices including that
of oil) this year. With domestic demand showing strength (which is partly
explained by preponement of demand given the expectation of interest rate
hikes), the Reserve Bank of India (RBI) will have no other option but to
raise interest rates to cool inflation. Elevated levels of inflation and
high interest rates will act as a dampener for domestic demand going forward.
On a medium- to long-term basis, India's growth outlook remains strong and
is likely to hover between 8 and 9%, mainly driven by relentless surge of
urbanization, the demands of a young population and the increasing number of
people (read consumers) moving to the medium and high income brackets.
Kunal Kumar Kundu is Senior Practice Lead, Knowledge Services Division,
Infosys Technologies Ltd. The views are those of the author, whose website
is http://kunalsthoughts.weebly.com | b*****e
发帖数: 5476 | | t*****9
发帖数: 10416 | 3 高薪请了mitbbs的水王灌出来的呗 。。。。。。 |
|
