
India’s Economic Growth Accelerates - kungfudoi
http://www.wsj.com/articles/indias-economic-growth-accelerates-1448886206
======
myth_buster
Significant point mentioned midway:

    
    
      The country’s growth also got a boost this year when 
      government statisticians changed the way they calculated GDP.
    

From the linked article:

    
    
      The Indian statistics ministry said that after updating the base year 
      used for marking trends in the economy and switching to a 
      market-price calculation of gross domestic product, the economy grew 
      by 6.9% in the year that ended last March. Using the previous 
      methodology, GDP expansion that year was 4.7%. China’s economy grew 
      by 7.4% in the 2014 calendar year.

~~~
roymurdock
Just to expand on the two revisions:

 _Since January 2010, the base year for India’s statisticians had been the 12
months that ended in March 2005\. From now on, it will be the year that ended
March 2012\. The revised calculation also incorporates more- comprehensive
data on corporate activity and newer surveys of spending by households and
informal businesses.

The government also said Friday that its benchmark measure of economic growth
will henceforth be based on market prices, not on factor costs. The latter
method, which India had previously preferred, tabulates economic activity
based on the costs of production, whereas the other method is based on the
amounts paid by consumers. Most countries and international bodies calculate
GDP based on market prices._

The base year for any country's GDP calculation is normally recalibrated every
5 years or so to adjust for structural differences in an economy - sustained
changes in the prices and of goods and services that are not attributed to
inflation, which pegging to the CPI of a base year is intended to mitigate.
These structural changes in the economy are due to new technology, changes in
the production process, changes in social/cultural norms, etc. Anything that
affects supply and demand other than price level. So this isn't a big deal.

The more interesting piece of the puzzle is the decision to move from cost-of-
inputs based calculation to an expenditure calculation. This is an accounting
problem for any economy that is transitioning from a goods-based economy to a
services-based economy. In developing economies, a lot of value is produced
outside of the market - eg cooking, cleaning, raising children vs. eating at
restaurants, hiring cleaners, hiring nannies, daycare, etc. As more of these
non-market goods/services move into the realm of the market, they start to
count towards GDP under this new expenditure-based GDP calculation. This can
lead to overinflated, overoptimistic growth projections.

At the end of the day, most countries calculate GDP using expenditure-based
vs. cost-of-production so it means we will be comparing apples to apples when
we talk about GDP in the US vs. the UK vs. India. But the real question is:
when will we create a better measure of growth than GDP? One that factors in
pollution and emissions at the very least is long overdue.

------
sremani
India will have a good run, as long as oil prices remain low. It still have to
do reforms which the Central and State governments are not willing to do. Even
though Modi is supposed to be the pro-business friendly messiah, the politics
and yearly elections at state level put certain binds and limitations. India
will have growth, and lot of people will be millionaires but I would be
surprised even in 2030 if India surpasses UK or Germany, and makes into TOP 5.
The economic policies are not cohesive and politics for a lack of better word
are "Tribal".

~~~
npalli
> I would be surprised even in 2030 if India surpasses UK

I would be surprised it if didn't surpass the UK by then. According to IMF[1],
the 2015 GDP of UK and India are 2864 and 2182 Billions USD. All India needs
to do is grow about 18% faster than the UK. Assuming UK grows at 3.0% that is
4.8% for India. Hard to see how in the next decade or so of low commodity
prices, booming working population, low debt overhang, china slowdown etc.,
India does worse than that. I would not be surprised if India overtook UK
before 2025.

[1]
[http://www.imf.org/external/pubs/ft/weo/2015/02/weodata/inde...](http://www.imf.org/external/pubs/ft/weo/2015/02/weodata/index.aspx)

~~~
ameen
Are you Indian? The new government has started imposing new levies and
commodities are at an all time high. The CoL is getting ridiculously expensive
and one could live comfortably in a few western countries at this rate.

Greed and corruption are pulling India further down than portrayed. Farmer
suicides are alarmingly high. IT companies are losing lucrative overseas
projects as well.

The need of the hour is to be economically mindful and invest in holistic
education and hope not to fall into a corrupt/beauracatic trap.

~~~
nautical
Please quote the sources of data for your claims ... From what I see
[https://en.wikipedia.org/wiki/Farmers%27_suicides_in_India#/...](https://en.wikipedia.org/wiki/Farmers%27_suicides_in_India#/media/File:Total_and_farmers_suicide_rate_per_100000_in_India,_time_trend.png)

------
rdlecler1
Now that China's commodity supercycle has ended, and commodity prices remain
soft, this is a good time for India to focus on infrastructure. They haven't
produced the Alibabas or Weibos but they have an amazingly solid IT work force
and we've seen more and more VC in India. This could be the start of a real
break out for India.

------
marcosdumay
India has been for some years consistently making the news on great and
diverse systematic corruption fighting actions.

Good to my theory that corruption is the main reason why (democratic)
countries don't develop. As far as I know, I have only Italy as example of
country that fought corruption and didn't grow after it.

~~~
eronhp
Italy was already a developed nation and birth rates have been falling for
some time.

------
bryanwb
this is great but at the same time terrifying. India thus far has committed to
power its growth using coal-fired plants. We in the west have definitely
committed our sins in this regard, however India is particularly vulnerable to
the changes caused by global warming

~~~
sremani
India's CO2 emissions are pittance compared to US, China and especially if you
take the population into account. India has such a coal shortage they are
making a pivot faster than many people think to Solar and Nuclear. The last
regime messed up the Nuclear part because Fukushima happened and there was
this leftist surge of pinning the blame on suppliers etc. If they fix the
liability laws in Nuclear, in next couple of decades, India will move the NG,
Solar and Nuclear at a satisfactory pace.

~~~
chimeracoder
> India's CO2 emissions are pittance compared to US, China and especially if
> you take the population into account.

Exactly.

India's carbon emissions per capita are the _lowest_ of all the countries
listed here[0]; the US emits almost ten times as much per capita. That's
literally 2.3 times as much by volume, even though India has 1.2 billion
people. (And the US isn't even the top of the list - Australia is!)

For comparison, the EU emits four times as much carbon per-capita as India,
which amounts to 1.5 times as much by volume (despite the EU's small
population of only 500,000,000).

China is often used as a bogeyman when it comes to the environment, but
honestly, even China's emits half as much carbon per-capita as the US does,
and only a hair more than the EU does. They just have four times as many
people as the US.

[0]
[https://en.wikipedia.org/wiki/List_of_countries_by_carbon_di...](https://en.wikipedia.org/wiki/List_of_countries_by_carbon_dioxide_emissions)

~~~
danans
Even when India achieves a level of development comparable to the US, Europe,
and increasingly China, it will likely still have a lower _household_ CO2
footprint, just because it is a much warmer place, with higher population
density.

The farther north you are and as long as the primary fuel is carbon-based (NG,
Electricity from NG or Coal), you'll need more of it to survive.

Transportation CO2 in India will likely grow, as it is a function of travel
frequency and distances for people/goods, and it takes basically the same
amount of energy per mile everywhere.

What's really striking to me is that the US per capita CO2 emission probably
isn't twice as high as China because of our high industrial output, but rather
because of our widespread use of carbon-intensive heating and propulsion tech
coupled with huge houses and vehicles, and low density cities.

All of these CO2 emissions can be turned around by really disruptive low/zero
CO2 energy generation, both variable renewables and stable baseline to replace
coal. For that we either need mass cheap energy storage, or invest seriously
in safe (non-fissile?) nuclear energy, preferably both.

~~~
devdas
And then Indians will spend that on cooling instead.

~~~
danans
Heating a house from 30F to 70F uses far more energy than cooling a house from
100F to 70F: [http://www.citylab.com/housing/2013/03/cities-dependent-
air-...](http://www.citylab.com/housing/2013/03/cities-dependent-air-
conditioning-might-be-more-sustainable-we-think/5115/)

The question is where does the electricity for cooling come from. If it's
mostly coal-powered electricity, that's pretty bad, considering the low
efficiency and high CO2 output of coal burning electricity generation.
Obviously that needs to change.

Hopefully they start using more nuclear and renewables as the cost of those
drops. For one thing, India has incredible solar resources
([http://mnre.gov.in/sec/DNI_Annual.jpg](http://mnre.gov.in/sec/DNI_Annual.jpg),
[http://www.dlr.de/tt/Portaldata/41/Resources/dokumente/insti...](http://www.dlr.de/tt/Portaldata/41/Resources/dokumente/institut/system/projects/reaccess/ssedni60.jpg)),
being as close to the equator as it is, and it also has large populations
living in areas with high irradiation, in comparison to Europe or even China.

Once the price of solar drops further (it's within reach of the middle-class
in US and Western-Europe), they will have even more reason to adopt it.

------
it_learnses
this is a claim according to the Indian government. Not necessarily true. A
related year old article on Quora: [https://www.quora.com/Why-is-Indias-GDP-
growth-rate-of-7-0-f...](https://www.quora.com/Why-is-Indias-GDP-growth-rate-
of-7-0-for-year-2014-is-a-false-using-the-new-calculation-method)

~~~
tinkerrr
Do you have a good source for this, or should be take every anonymous Quora
answer with literally zero references as the authoritative source on a topic
as complex as the economy?

The comment is obviously flawed since it's trying to equate the GDP to
industrial production. In the US, for instance, the annualized industrial
production has been -1.8% [1] but the GDP growth has been +3.4% annualized
[2]. This is a difference of 4.2 percentage points, similar to India's per the
comment. Also, India's export growth is around 1% - not exceptional, but
definitely not -10% as stated in the Quora comment [3].

[1]
[http://www.wolframalpha.com/input/?i=us+industrial+productio...](http://www.wolframalpha.com/input/?i=us+industrial+production)

[2]
[http://www.wolframalpha.com/input/?i=us+gdp+growth](http://www.wolframalpha.com/input/?i=us+gdp+growth)

[3]
[http://www.wolframalpha.com/input/?i=india+export+growth](http://www.wolframalpha.com/input/?i=india+export+growth)

~~~
it_learnses
[http://blogs.reuters.com/breakingviews/2015/06/05/india-
gdp-...](http://blogs.reuters.com/breakingviews/2015/06/05/india-gdp-growth-
is-one-third-statistical-illusion/)

[http://money.cnn.com/2015/02/09/news/economy/india-gdp-
growt...](http://money.cnn.com/2015/02/09/news/economy/india-gdp-growth-
mystery/)

------
allpratik
Current Indian government has started playing with numbers, it can backfire.
Below article mentions some not-so good numbers.

[http://www.firstpost.com/business/11-reasons-why-india-
growi...](http://www.firstpost.com/business/11-reasons-why-india-growing-
at-7-4-is-simply-not-believable-2527766.html)

~~~
npalli
I don't know if the govt. is massaging numbers, but the very first 'problem
with GDP' in the list makes no sense. GDP is calculated on net exports
(exports - imports). So to evaluate the increase or decrease in GDP you need
to know what happened on the imports side. India is massive energy and
commodity importer, and energy has more than halved in price over last year.
Without knowing how much the imports have fallen how can you assert its impact
on GDP. Given india imports commodities and exports finished products it would
not be surprising if the actual GDP rose (net exports).

------
tn13
The accelerated growth might be a result of lower oil prices than anything
else. It will be interesting to see how the current government goes ahead with
the necessary reforms to ensure that the growth is sustainable.

------
meow_mix
Please stop posting paywall'd articles

~~~
jeffjose
Step 1 - search for the article on Google -
[https://www.google.com/search?q=India’s+Economic+Growth+Acce...](https://www.google.com/search?q=India’s+Economic+Growth+Accelerates)

Step 2 - Click.

~~~
myth_buster
Optionally click on "Web"

    
    
      9 points by kungfudoi 1 hour ago | flag | past | WEB | 2 comments

