Tag: GDP growth

Government revises downwards GDP growth data during UPA regime

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government on Wednesday lowered the GDP growth rates for a majority of the previous 10 years of the United Progressive Alliance (UPA) regime, saying the data has been recalibrated to reflect a more appropriate picture of the economy.

The GDP growth rates for FY 2006-12 have been revised using new back series data, chief statistician Pravin Srivastava said at a press conference.

As per the data released by the Central Statistics Office (CSO), the economy in 2010-11 grew by 8.5 percent and not 10.3 percent estimated earlier.

In 2014, the government adopted new base year to include more sectors into GDP calculation with an aim to give a more realistic picture of the economic growth.

In August, a committee appointed by the National Statistical Commission used back series calculations and reported that the Indian economy grew in double digits— at 10.23 percent in 2007-08 and 10.78 percent in 2010-11 — during the UPA era under prime minister Manmohan Singh.

Also Read: GDP recalibration based on FY11-12 prices, covers new sectors with new methodology, says NITI Aayog vice-chairman Rajiv Kumar

The opposition Congress party defended the record of the UPA government on the basis of the back series data and attacked the Narendra Modi government’s economic track record.

Wednesday’s data will now give the Modi government ammunition to return the favour.

“It is not a structural change as such. It is more of what we had come out in the 2011-2012 series, we have used the same methodology backwards and is recalibrating the economy based on the new approach,” Srivastava told CNBC-TV18.

It is looking at the economy with a different set of lens which CSO has used for 2011-2012 and that projects the picture based on the data sets and the new sources and the SNA (Social Network Analysis) methodology, Srivastava said.

“The reason why we touched base with Niti Aayog this time because we felt that is an important activity and since they are one of the major users of the data set, so involving them would have helped everyone,” he added.

“What the back series has done is used the sales tax. There is a document somewhere which compares the growth in GTI to the sales tax, I think it is there in the committee report,” said TCA Anant, former CSO.

That is one of the major reasons why the growth in this component comes down and this is not a small component, it is a fairly large component in GDP, Anant said.

“There are different methods for calculating a lot of things. The methodology used was essentially splicing the nominal values and then converting them to constant price values by using a price deflator,” said Pronab Sen, former CSO.

I would prefer to have different methodologies being applied because the problems in each sector in terms of back-casting are different and therefore you cannot use the same one size fits all methodology, he said, adding that before passing a judgment on whether this is accurate or not, I would need to know which sectors have been subjected to which methodology.

The Congress accused the Modi government of “manipulating” GDP data of previous years and said it reflects an desperate attempt to undermine India’s growth story over the last 15 years.

Congress chief spokesperson Randeep Surjewala termed the step a “classic” case where “the operation is successful but the patient is dead”.

“The entire GDP back series data released today reflects the desperate attempt of a defeatist Modi Government to undermine India’s growth story over last 15 years. Modi Government and its puppet Niti Aayog want the people to believe that 2+2=8. “Such is the gimmickry, jugglery, trickery and chicanery being sold as ‘back series data’,” he said in a statement.

Former finance minister and senior Congress leader in a tweet said Niti Aayog’s revised  GDP numbers are a joke.

Niti Aayog’s revised GDP numbers are a joke. They are a bad joke.

— P. Chidambaram (@PChidambaram_IN) November 28, 2018

“Niti Aayog has done the hatchet job, it is time to wind up the utterly worthless body,” he tweeted.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India’s GDP growth in Q2 likely to slow to 7.5-7.6%, says SBI

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Ahead of the official release of the second-quarter GDP figures, State Bank of India (SBI) on Monday estimated the country’s economy to expand by 7.5-7.6 percent, slower than the prior quarter, mainly on account of a slowdown in rural demand.

India’s largest lender also said in its Ecowrap report that the SBI Composite Leading Indicator (CLI), a basket of 21 leading indicators for the quarter in consideration, is showing a marginal declining trend.

“Consequently, the headline second quarter Gross Value Added (GVA) growth could be 7.3-7.4 per cent, due to the slowing of rural demand,” the report said.

GVA is the measure of national income and output that includes taxes and excludes subsidies.

As per the first-quarter (April-June) figures released earlier by the Central Statistics Office (CSO), India’s gross domestic product (GDP) had grown by 8.2 per cent.

“We also believe that the growth numbers in the second quarter will be helped by a weak base in the September quarter of 2017-18. We estimate that the base impact on second quarter GVA growth is around 30 bps (basis points). Based on tax collections, we subsequently expect second quarter GDP growth at 7.5-7.6 per cent,” said the report authored by SBI Chief Economist Soumya Kanti Ghosh.

It also said that commercial vehicle sales, domestic air passenger traffic and cement production have maintained double-digit growth during the second quarter, pushing up the quarter’s GVA estimate.

“The monthly data of various indicators for October 2018, however, suggest the GVA growth is slowing down due to decline in demand,” Ecowrap said.

“Of particular concern is that non-food credit, bank deposits and sale of passenger and commercial vehicles have slowed down as compared to previous month. Also, with a slowdown in government spending in the second quarter, the fiscal impulses to growth would now be clearly missing,” it added.

The report expressed “particular concern” about a global growth slowdown and “2019 could be the inflection point.”

SBI expects manufacturing GVA in the quarter in question to pick up further with better performance of listed companies.

“Overall manufacturing sector, which grew by 5.7 per cent in 2017-18, could now accelerate in the current fiscal with possible support from both crude oil prices and subsequent strengthening of the rupee,” it said.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

‘GDP growth may ease to 7.2% in Jul-Sep on sluggish economy’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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After the strong upswing in April-June quarter, GDP growth for July-September is expected to dip to 7.2 percent due to sluggishness in agriculture and industry, a report said on Tuesday.

It can be noted that the GDP had grown by a higher than expected 8.2 percent in the first quarter of the fiscal as compared to the year-ago period. Official data on quarterly growth will be released at the end of this month.

The dip in the growth number will be largely on account of a pull down from industry where growth is expected to slow down to 7.1 percent in the September quarter as compared to 10.3 percent in June and the farm sector, which may slow down to 3.5 percent from 5.3 percent, domestic rating agency Icra said in a report.

Higher fuel prices and the weak rupee were pointed out as the primary factors dragging the industrial growth, while an uneven and sub-par monsoon, flooding in some areas amid a late withdrawal of the monsoon rains, and instances of crop damage and pest attacks will impact the farm sector.

Its principal economist Aditi Nayar said pre-tax margins for companies have declined on a quarter-on-quarter basis because of a rise in the input and energy costs and the rupee depreciation.

“Overall, we expect manufacturing GVA (gross value added) growth to ease to 7.0 per cent in Q2FY19 from the healthy 13.5 percent expansion in Q1FY19,” she said.

The agency said higher commodity prices may support a shallow recovery in GVA growth in mining and quarrying from the marginal 0.1 per cent in Q1FY19 to around 2.5 percent in Q2FY19, despite a slowdown in volume growth.

Similarly, electricity, gas, water supply and other utility services and construction activity will also show an upswing due to a variety of sectoral factors, it said.

On agriculture, the agency said the first advance estimates of crop production indicated a decline in kharif output in FY2019 for pulses, coarse cereals, and cotton, and a rise in oilseeds, sugarcane and rice.

The services sector growth is expected to rebound to 7.8 per cent for the September quarter from the 7.3 per cent in the first quarter, led by a sharp pickup in the expansion in the Centre’s non-interest revenue expenditure and a mild rise in growth of bank deposits.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

NBFC crisis poses more growth headwinds, says report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The ongoing crisis of confidence in non-banking financial companies (NBFCs) may prove to be a drag on economic growth, as balance sheet constraints and higher funding costs may prompt these shadow banks to slowdown lending, warns a report.

But this will come as a growth booster for banks, which for long have been ceding credit market share to NBFCs, which had accounted for 12-15 percent of the total credit generated in the past two fiscals.

Warning that lower credit availability from NBFCs will hurt growth, Singaporean lender DBS’ economist Radhika Rao said, “the likelihood of stricter lending controls on NBFCs and tougher operating environment is likely to impinge on their ability to expand their books, prompting them to scale back their aggressive growth targets…as a result overall credit availability is likely to moderate, which in turn will be hurting growth.”

However, the slower growth can reduce the asset quality concerns, if incremental funding is deployed in quality loans rather than high risk loans.

The difficulties faced by NBFCs, which for long have been credited for deepening credit flow to pockets where banks have not been able to operate, poses a “downside risk” to DBS’ FY19 GDP growth estimates of 7.4 percent and 7.8 percent the fiscal later, she said.

The other headwinds for growth include higher rates, lower fiscal headroom and sub-par private sector spending.

Share of NBFCs in financing mciro, small and medium enterprises has risen to 11.3 percent as of mid-2018 against 8.4 percent two years prior. By comparison, public sector banks’ share came down massively during this time to 51 percent in June 2018 against 60 percent two years ago.

Non-banking finance companies have been hit badly following the defaults by IL&FS since September, leading to a deep funding squeeze by banks on one hand and lack of investor appetite for their debt instruments on the other.

This has resulted in higher credit disbursal by banks in October to 14.4 percent from 12.5 percent in September.

This is because many NBFCs have been shifting from capital/money market borrowings to bank borrowings, particularly those with unutilised/undrawn credit lines.

On the other hand, NBFCs have also sought more credit line from banks as cost of markets-based borrowings ticked up, leading to a 44 percent spike in such loans since August, she said.

“We continue to look for banks to increase their market share as a primary source of funding to commercial sector, as balance sheet constraints and higher funding costs prompt NBFCs to slow lending activity,” Rao said.

As funding costs rise, NBFCs’ liabilities are likely to get repriced more than assets particularly shorter-tenor borrowings, posing refinancing challenges.

Though larger NBFCs can still manage their costs by tapping public issues, smaller ones will find it a challenge to seek alternate sources of funding, which will impact their margins, forcing them to restrain balance sheet expansion.

At the same time, banks will not be able to meet all the displaced funding demand because at least half of the public-sector banks are ring-fenced under the prompt corrective action framework by the RBI, which restricts them form fresh loans, crimping overall credit availability.

Secondly, NBFCs, particularly those specialised in microfinance, housing, auto finance, rural etc, have thrived in pockets where traditional banks face limited geographical reach, lower appetite and ability of mainstream banks to reach such borrowers.

According to Sidbi, share of NBFCs in MSME financing has risen to 11.3 percent as of mid-2018 against 8.4 percent two years prior, leading to lower market share of public sector banks to 51 percent in June 2018 against 60 percent two years ago.

“Even if troubled NBFCs rolled back their presence, it will be an uphill task for banks to fill this gap,” says Rao.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Government records higher custom duty revenue in first half of 2018-19, says report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A higher-than-expected custom duties collected in the first half of the fiscal is likely to help the government check its fiscal deficit within the targeted 3.3 percent of gross domestic product (GDP) of 2018-19, Business Standard reported.

The customs revenue growth was registered at 26 percent for the period between April-September 2018-19, higher than the expected 19 percent in basic custom duties, the report said citing official sources.

The finance ministry’s port level data shows the gross import tax collection (customs and integrated goods and services tax) has grown about 33 percent in the period between April to October, as compared to last year, the report added.

However on the back of the rupee, that stabilised higher than the average level in the first half and higher custom duty rates that will be applied for a period of six months unlike the gradual rise of duties on commodities that happened in the first half, the revenue collected in the second could even be better, the report added quoting sources.

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Government, RBI must initiate more measures to improve liquidity scenario: Ficci

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Industry chamber Ficci on Wednesday said more measures are needed to make adequate liquidity available in the system and strengthen the financial sector for attaining 8 percent plus GDP growth.

In a statement, the chamber said the tight liquidity situation in the festive season and rising interest rates will impact the SMEs, MFIs and sectors like housing. The SME credit issue is the most crucial one and all measures should be explored to address this.

It said the present situation demands that the RBI and the government work to bring in measures to improve the liquidity scenario in the coming months.

“While a 21-point suggestion has been submitted to the government and RBI to tackle the NBFC liquidity problem, the chamber also took part in the FSDC deliberations on the issue yesterday,” Ficci said.

It further said its members who represent SME sector have been asking for cheaper and easier availability of credit.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India to exceed 7.5% growth in FY19, say economic affairs secretary

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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With 8.2 percent growth in the first quarter, the Indian economy has completed its recovery process and will exceed 7.5 percent growth rate in fiscal 2018-19, Economic Affairs Secretary Subhash Chandra Garg said on Friday.

He also said the country will meet its fiscal deficit target of 3.3 percent and expressed his belief that both oil price hike and rupee depreciation are temporary.

“With this quarter, I think the V-shaped recovery process is complete,” Garg told reporters.

As per an official data released by the Central Statistics Office (CSO), the GDP at 2011-12 prices in the first quarter of 2018-19 registered a growth of 8.2 percent, up from 7.7 percent in Q4 of 2017-18 and 5.6 percent from a year-ago corresponding quarter.

“We predicted growth would be in the range of 7 to 7.5 percent annually. I think we are reasonably confident now that we might even exceed the higher end of our projection and therefore Indian economy would be performing robustly and will definitely be the highest growing economy in the world,” the Finance Ministry official said.

Sharing highlights of the GDP data, he said 13.5 percent growth in the manufacturing sector though on a low base of last year signals a very good turnaround.

“Another notable point is the robust capital formation. This quarter we grew by 10 percent building on the last quarter growth of 14.4 percent. This has started getting reflected in the ratio of the investment in the economy.

“We had 31 percent investment rate last year, it is now 31.6 percent thanks to the gross capital formation coming up very well,” he said.

On the possibility of touching double-digit growth rate, he said 10 percent growth might happen in a quarter but 10 percent for an annual growth is very ambitious and may not happen. In nominal terms, the growth in the quarter was 12.5 percent, he said.

Further, he said 8.2 percent growth in the first quarter over 5.6 percent growth in the corresponding quarter last fiscal cannot be simply explained by the base effect.

On fiscal deficit for April-July, which stood at Rs 5.40 lakh crore accounting for 86.5 percent of the full year’s target, Garg said the government deliberately follows a pattern of more expenditure and less revenue in the first quarter and more revenue and relatively less expenditure in the last quarter.

“So, the fiscal deficit of 86 percent in first four months does not indicate any severe fiscal stress. We are exactly on our plans as far as fiscal management is concerned. We are perfectly confident that the fiscal deficit target of 3.3 percent will not be exceeded at all.”

On rising crude oil prices and rupee depreciation, the Secretary said he hoped that both the factors are temporary and there will be little impact on inflation.

“The inflation number so far suggests a very moderate, well-controlled inflation. We had 4.17 percent inflation last month. Inflation in aggregate is in a very comfortable zone. However, I do recognise that oil price increase and rupee depreciation will have inflationary implications. I hope both these factors are temporary,” he said.

Garg also said the capital account performance of the economy was doing well with 13-14 percent hike in FDI in the first quarter and signs of reversal in FPIs.

“Therefore even in the capital account, we should have a steady performance going and that is what gives me confidence that with our reserves and the capital flows emerging, the temporary volatility you see in the rupee should be gone,” he added.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

State Bank of India expects Q1 GDP growth at 7.7%

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Lending major State Bank of India (SBI) on Wednesday said that its Composite Leading Indicator (CLI) has hinted a GDP growth of 7.7 percent during the first quarter of 2018-19.

The bank has developed — SBI CLI — to detect early signals of turning-points in economic activity by taking the basket of 18 leading indicators.

“The CLI is signalling that the economic activity for Q1FY19 has picked up substantially and the GVA growth would be 7.6 percent,” an SBI Ecowrap report said.

“However, the headline GVA is being possibly pulled down by a weak agri growth. Major indicators, that we found are driving GVA in Q1 FY19 are cement production, passenger traffic, sale of both commercial vehicle and passenger vehicle, non-food credit growth and aircraft movement among others,” the report said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Growth worries see New Zealand’s central bank turn ‘blatantly dovish’, kiwi slides

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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New Zealand’s central bank unexpectedly committed to keep interest rates at record lows through to 2020 and said it was worried about persistently disappointing growth, a dovish tilt that sent the local currency skidding to multi-year lows.

The Reserve Bank of New Zealand (RBNZ) downgraded its forecasts for 2019 gross domestic product (GDP) growth to 2.6 percent from 3.1 percent earlier as it kept its official cash rate on hold at 1.75 percent in a widely expected move.

The RBNZ now sees the cash rate steady for much longer than earlier forecast, signalling stable rates until late 2020. Back in May, the central bank had projected rates at 2.0 percent by March 2020.

“On balance, we just need to be continuing to make sure that we are blowing wind into the sails of the economy for some time yet,” Governor Adrian Orr told Reuters.

“And in fact, if you saw a deterioration in growth, i.e. a non response, then we might have to blow more wind.”

The dovish policy slant caught markets off guard, and the New Zealand dollar fell sharply to a trough of $0.6665, its lowest in nearly 2-1/2 years, having traded above $0.6750 on Wednesday.

“The RBNZ has very consciously sent a message that they have become more dovish in the past six weeks,” economists at ANZ Bank said in a report.

The rates outlook was significantly more cautious than financial markets had bargained for. Before Thursday’s meeting, they were pricing in a full 25 basis point hike to 2.0 percent by the middle of next year.

Orr said the central bank’s growth forecasts had proven too optimistic over the past 18 months, and it was sensitive to further downward surprises. In contrast, while inflation was edging towards the 2 percent midpoint of the RBNZ’s target, it was well contained and unlikely to surge.

The economy hit a soft patch earlier this year and business confidence has sunk to decade lows, raising concerns a slowdown in business investment could further dent domestic activity.

“That’s our number one downside risk… that people talk themselves into not investing,” Orr said.

The economy expanded at an annual rate of 2.7 percent in the first quarter from 2.8 percent at the end of 2017, and is below a recent peak of 3.3 percent in 2017.

“The main message for the Reserve Bank was one of heightened uncertainty, as downside risks prevail,” Kiwibank economists said in a report, calling the RBNZ’s projections “blatantly dovish”.

“It’s time to watch, worry and wait.”

Well-Behaved Kiwi

Orr said the New Zealand dollar’s recent fall was consistent with its modelling around interest rate and inflation differentials, and was near what the central bank calculated to be fair value. It was projected to weaken further in trade-weighted terms, with the gap to the US Federal funds rate set to widen.

“I mentioned that I have been really pleased with how the exchange rate has been behaving, because effectively it’s been doing what it’s meant to do, which is reflect the relative expected inflation differentials between two currencies.”

However, the currency’s sharp drop on the more dovish central bank tone took its losses against the US dollar this year to 6 percent.

Kiwibank economists cut their year-end and mid-2019 forecasts for the currency by four cents to $0.65 and $0.63 respectively.

Orr said while the escalating trade war between the United States and China was attracting a lot of attention, so far the impact on New Zealand, which is an open trade-dependent economy, was not large – but that could change.

“It’s a very hard thing to model, we had a crack at it, and the answer is from what we’ve seen to date it doesn’t make a huge difference,” he said.

“But it could get bigger, and/or it could impact global business confidence.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow