[Samurai]

Originally Posted by carboy

When you are comparing GDP to see who is richest, what you are doing is adding up heights of all people in each class & comparing different classes one with 10 people, one with 100 people, one with a 1000 people & one with 10000 people. And claiming the class with 10000 people is the "tallest" class because sum of heights is maximum.

Is that what you understood from my example about height? Then it is better we don't argue about statistics.

[DigitalOne]

Originally Posted by V.Narayan

Genuine Question: Can the experts throw light on how much of our jump from 2014 to 2022 come from the changes that were made in the way our GDP is counted?

For that we need to understand what was changed. Quoting from wikipedia:

Highlighting mine

Under NAS 2011-2012, the services sector constitutes a smaller proportion of overall GDP at 50.91% as of the fiscal year that ended March 2014 compared to 57.03% under the previous system.[7] Under the new calculation method, industry became 31% compared to the old 25%, whereas services became 51% compared to the old 57%. Within industry, all three components, mining, manufacturing, and construction, were raised.[8]

First, if the weightage of industry has been increased and yet we have been able to achieve higher growth rates, then it means that we are doing better in manufacturing, which is good.

GDP growth rates under the new series appeared to be higher than they had been under the old series; however, per the preceding section, this increase was achieved because the estimate of GDP level for previous years was lower in the new series than the old.

Second, if even if one considers 2015 rebasing as statistical manipulation, it should resulted in a one-time jump only for 2014? The subsequent years GDP growth rates are still valid, right?? Or is my understanding wrong?

[Mustang_Boss]

Originally Posted by am1m

With reference to this piece of news:
Now I can get that an asset reconstruction company probably has more tricks up its sleeve to recover or re-balance bad debt. And I guess picking up 48k Cr worth of loans (can they be called assets, considering they are bad loans?) at about 11k Cr might be a good deal.

Let me take another Jab at it..

Asset Reconstruction Companies have a ton of tricks up their sleeves.

Say, you are Big company "A" and you have a subsidiary called "B Asset Reconstruction company". You can buy the assets at a significant prices, which you can use to balance your taxes in Company "A"

The other reason is, The assets aquired are not bad, but Expensive. Say Yes bank gave 5Billion $ loan to build Antilla (Bad example, but for your imagination), which costs ~2 Billion, The bad loan will be 5 Billion $, but Antilla is still worth 2 Billion $. Somehow if they can take advantage of the 3 billion in taxes + If they cannot procure additional land in mumbai prime area , this will be a good deal for them.

In some cases, Legally you cannot enter into business into other areas [Laws prohibit] But by aquiring through Asset Reconstruction, you can enter the area of business. Say, you are a Gas company, You may be prohibited to start a Power company. But by this route, it would be much easier.

In this example, we will have to see the complete portfolio they are acquiring, which could give a better insight.

[Gsynch]

Originally Posted by V.Narayan

Genuine Question:

The chart indicates we were 10th placed in 2012. Fact is we have often reached the 10th spot in the last 50 years and then slipped. We were 10th in nominal GDP in 1970 too. So while I'm happy that we are now 5th in the GDP rankings I'll keep my fingers crossed for another 2 years till we truly get past France & the UK. India, France & the UK have been exchanging spots in the 5th, 6th & 7th place with each other for the past 4 years.

We started at rank Six and we are currently at rank Five. India's development path has been reshaped. 60s, 70s were a terrible time for India. We reentered the development phase from 1980s.



It's V-shaped, which shows we have bounced back. We are where we were at the origin data. The story about per capita income, single most economic criteria of a country's success, has been more telling. At the current rate, it will take about 15 years for India's per capita to double.

[Mustang_Boss]

Originally Posted by V.Narayan

Genuine Question: Can the experts throw light on how much of our jump from 2014 to 2022 come from the changes that were made in the way our GDP is counted? It is not as if our growth in 2012 to 2020 was earth shattering.

When I was a child 50 to 55 years ago poverty was on the streets that reminded us we were a poor country. Now it is easy to forget. The poorest person most of us deal with most of the time is our maid or a peon/runner in our offices. They are not in that bottom 50%.

Privatization of the companies played an important role. Now, we have LIC with the highest Market cap, amost more than reliance. Earlier their contributions never got added to the GDP, now, they will be as it is a listed Company. Earlier, it was seen as a Government subsidiary and used to contribute to how big the government was. Now it is a private company, and all addition in value gets contributed to your number.

Upcoming divestments like IRCTC, and others will heavily impact the numbers you are looking at.

When you were a child....
Those days were different. India just came out of British hands and they were trying to replicate socialism/communism in line with Russia. To give you a perspective, They just wanted india like a Small farmer, using water from his well and producing whats needed for the home. They never wanted to buy LifeBuoy soap and Shampoo or other items produced by neighbors.

Today, they want to work in neighbor fields, make money, use this money to buy lifebuoy soap, LG TV, VW Cars, etc.
Today, india let its workers work for foreign companies and get money home. This money is used to procure whats needed like mobiles, etc.

-- The second part.

The other part is, The poverty you saw when you were child is not gone. It still exists but is heavily masked by the government's way of handling things using heavy taxation, Welfare for all and currency depreciation, etc. So, there is a probability of "you might see the same old days again in your life time". Why am i saying this?

Government subsidies to Farmers is at ~28-60 K [28K from Center and the rest is from states] per Farmer per year. On top of it, add the loan waivers and other subsidies. These number iteself pushes their wage up. So now, with this information in mind, have a look at the Gini numbers. They will look very skewed.

Lets go back to the above example of a Farmer:
As you have seen, now your people are going out and earning money from other fields, but what happens if anything slows down? They will cut outside labor and they will start farming on their own. Who gets impacted, the one who is making more from other fields. In this case, its us. Our market is heavily driven by the IT, BPO folk. This gets much deeper too.

Any suggestions on what i am missing? Appreciate your inputs and comments.

[Mustang_Boss]

Originally Posted by Samurai

The current count of white collar workers in India is less than 2 crores.
The current count of blue collar workers in India is around 40 crores, give or take a few crores.

Considering we have so few white collar jobs compared blue collared jobs (1:20 ratio), even if 1 crore kids of 40 crore blue collar workers enter the white collar market (and they will), there will be very high unemployment.

@Samurai sir, Ran through the last few pages and Loved your perspective on different areas.

Regarding the above quoted text, my observations are as follows:

- Most of the states provided free education, which crated a shortage of low wage workers and as government was paying for education, most of them got degrees. The government also tweaked with the way their mark sheets are evaluated to ensure a higher pass ratio from their states.

- Covid + Media + other reasons Impact on Students.

These two factors had a heavy influence on the quality of the students from the south. I have no idea about the north.

Now, coming to your point.
Say, If i buy a high grade basmati rice, The % of broken rice in it could be ~3-5 %.
But, if i buy a medium or low grade Basmati rice, the % of broken rice would be ~30-40%

With this in mind, even if more % of graduates are entering the industry, the quality of students shall remain the same.
Considering a significant % of the White collar people today say ~30% of them retire in the next 5-8 years, wouldn't the new add's match or may be less than today's white collared people %?
Day by day, things are Getting complex everywhere. Even the road side mechanic has to deal with ECU on bikes to fix it, and education plays an important role to sustain. So, as long as the quality of education doesn't improve, the numbers might not add any real value.
The Local governments intended to show higher education %. So, they did it. But will it really add to the % of White collared people? Yes, but It might not exceed in net % terms, i think.

I would love to hear your views. Am i missing anything?

[carboy]

Originally Posted by Mustang_Boss

Privatization of the companies played an important role. Now, we have LIC with the highest Market cap, amost more than reliance. Earlier their contributions never got added to the GDP, now, they will be as it is a listed Company. Earlier, it was seen as a Government subsidiary and used to contribute to how big the government was. Now it is a private company, and all addition in value gets contributed to your number.

First of all, LIC was not privatized. They just did a disinvestment of a small part. 2nd of all, where did you get the idea that previously it wasn't counted & now it will be counted? Their disinvestment (or even if they had been privatized) would make zero difference to GDP calculations.

Originally Posted by Mustang_Boss

The other part is, The poverty you saw when you were child is not gone.

We are still one of the poorest countries in the world. We have more extreme poverty as compared to both Pakistan & Bangladesh even though their per capita incomes are lower than ours.

https://www.adb.org/sites/default/fi...south-asia.pdf
India - 22.5% extreme povery
Pakistan - 8%
Bangladesh - 19%


I think BHPians need to get out of their gated communities & wander around a bit.

[Mustang_Boss]

Originally Posted by carboy

First of all, LIC was not privatized. They just did a disinvestment of a small part. 2nd of all, where did you get the idea that previously it wasn't counted & now it will be counted? Their disinvestment (or even if they had been privatized) would make zero difference to GDP calculations.

We are still one of the poorest countries in the world. We have more extreme poverty as compared to both Pakistan & Bangladesh even though their per capita incomes are lower than ours.

I think BHPians need to get out of their gated communities & wander around a bit.

As per the definition from Google "GDP is composed of goods and services produced for sale in the market and also includes some nonmarket production, such as defense or education services provided by the government."

If a Mutual fund invests in LIC and makes 100/- Would it not be added to GDP? Earlier, they were not able to do it as it was completely owned by the Government. Today, Canada pension funds and other pension funds have invested in LIC. Whether they make money out of it or not, thats a different topic.

I have never made any comments about poverty. I agree we might have a higher % of poverty than the numbers quoted in the provided URL. I Also, agree with the Pakistan and Bangladesh part but cannot assert it.

But, You have to realize that India has 3X + more population than Bangladesh and 7X more than pakistan.
Based on your Logic, now compare these two countries with Switzerland or other smaller population countries like Panama islands, You will see a stark contrast.

Get out of Gated communities and wander around? Yeah, i do that Often.

Bud, try to have an open perspective to realize the root causes and their impacts. Just by comparing ourselves with others is not going to help in any way. But, by understanding the reality, you can better position yourself and others around you. Just bashing is not going to help anyone.

[carboy]

Originally Posted by Mustang_Boss

If a Mutual fund invests in LIC and makes 100/- Would it not be added to GDP?

Assuming the mutual fund had same amount of money to invest, they would have invested in some other stock. Disinvestment made no difference to that.

Originally Posted by Mustang_Boss

But, You have to realize that India has 3X + more population than Bangladesh and 7X more than pakistan.

Which is one of the reasons why we are in the top 5 in GDP & higher than many countries which are far far richer than us. Our population plays a big part in our GDP. If we had the same per capita income as now & same population as Pakistan we would have been #15 or #20 in GDP. I guess Pakistan is currently at #24.

[Mustang_Boss]

Originally Posted by carboy

Assuming the mutual fund had same amount of money to invest, they would have invested in some other stock. Disinvestment made no difference to that.


Which is one of the reasons why we are in the top 5 in GDP & higher than many countries which are far far richer than us. Our population plays a big part in our GDP. If we had the same per capita income as now & same population as Pakistan we would have been #15 or #20 in GDP. I guess Pakistan is currently at #24.

If i go to CarolBagh [I don't know where it is] for car accessories, their high availability and variety will ensure i spend more. But if i go to a local accesory shop, which is isolated from other Accessories shop, i will limit and stick to the bare minimum i need. Money does exist, but the participation prospers in one case, where as in the other, it gets constrained.


To be honest i am happy for Bangladesh and Pakistan. I am very happy that they rank above us. If not, i cannot imagine a situation where 40 Cr from Bangladesh and 20 Cr from pak think of moving to india just by taking a short walk. I cannot imagine the impact on our current poverty levels and the impact on the current welfare, if any such move happens.

I really do not understand your pessimistic view, when you are in a much better situation than those residing in these nations.
If your view is to win on numbers, i dont want it. I want india to be always lower than them.

[carboy]

Originally Posted by Mustang_Boss

If i go to CarolBagh [I don't know where it is] for car accessories, their high availability and variety will ensure i spend more.

Or you may come back home without buying anything because you cannot afford those prices.
That aside, this comparison is silly - are you saying that LIC is a more expensive stock than some other stock and that's why people buying it is better than people buying other stock & hence it increases GDP?

Originally Posted by Mustang_Boss

I really do not understand your pessimistic view, when you are in a much better situation than those residing in these nations.

Where did I say I am not? I am not under the poverty line, so those poverty stats don't make a difference to me.

My point is that this GDP #3 or GDP #5 is a meaningless stat. The right stat to check is GDP per capita where we aren't in the top 100. That's the stat which makes a difference to the population, not the GDP stat.

[Mustang_Boss]

Originally Posted by carboy

Or you may come back home without buying anything because you cannot afford those prices.
That aside, this comparison is silly - are you saying that LIC is a more expensive stock than some other stock and that's why people buying it is better than people buying other stock & hence it increases GDP?


My point is that this GDP #3 or GDP #5 is a meaningless stat. The right stat to check is GDP per capita where we aren't in the top 100. That's the stat which makes a difference to the population, not the GDP stat.

https://www.business-standard.com/ar...2900016_1.html

Check the number of additional new accounts got created for LIC. Assuming an allocation of one Lot per account, which would be ~15000/-, you can calculate the total new amount which came to market, which was otherwise stuck in some almirah.


Ok. GDP per capita of our country will never exceed the west. They can print their $$$ and Euros, but no one will accept our currency for trade. Except russia now.
If it does exceed, then we are in much deeper trouble. Today, we do not allow many foreign companies easily and tax the hell out of their products. If this day ever comes, you can safely assume we would be F*****d very badly.

[V.Narayan]

Originally Posted by DigitalOne

For that we need to understand what was changed. Quoting from wikipedia:
Second, if even if one considers 2015 rebasing as statistical manipulation, it should resulted in a one-time jump only for 2014? The subsequent years GDP growth rates are still valid, right?? Or is my understanding wrong?

Thank you @DigitalOne. This helps. I agree even if the change was politically motivated it can bump up only one year and relative growth or degrowth in the years thereafter doesn't change.

Originally Posted by Gsynch

Attachment 2358183
We started at rank Six and we are currently at rank Five. India's development path has been reshaped. It's V-shaped, which shows we have bounced back. We are where we were at the origin data. The story about per capita income, single most economic criteria of a country's success, has been more telling. At the current rate, it will take about 15 years for India's per capita to double.

Thanks for the data & charts. In a way we have come a full circle but being 6th in 1947 didn't mean very much with Japan, Germany & China in ruins and most of the world outside South America under the thumb of colonial rule. I believe being 5th in 2022 means a lot more in real economic clout.

Originally Posted by carboy

India - 22.5% extreme poverty
Pakistan - 8%
Bangladesh - 19%

Given my full time occupation in the social impact sector I can fully believe extreme poverty in India being 22.5%. I'd say 22.5% to 30% because economic movements, health of a family member, crash in prices of agro-produce etc can push a marginal family under the line in a heartbeat.

At a stretch I can believe the 19% in Bangladesh too because of the abundance of fish almost everywhere. Though if you visit Bangladesh you'd be hard pressed to swallow that figure despite the laudable recent economic success of that country.

As for Pakistan - 8%!!!! Here is a country that has refused to hold even a census for 19 years till 2017. I don't know what the figure is but it cannot be 8% even if the ADB says so. India, Pakistan & Bangladesh started off at the same economic point roughly in 1947. Two countries did significantly better economically & politically than the third. The third has the smallest, most indebted economy of the three and a per capita 2/3rds of India or Bangladesh and yet the ADB says they have a massively lower proportion under extreme poverty!!!! GDP per capita data in the chart below. data for 2021. IMF.

I think BHPians need to get out of their gated communities & wander around a bit.

When we don't know who the members are and what they do for a living snarky comments don't help :-)

[carboy]

Originally Posted by Mustang_Boss

Check the number of additional new accounts got created for LIC. Assuming an allocation of one Lot per account, which would be ~15000/-, you can calculate the total new amount which came to market, which was otherwise stuck in some almirah.

Why are you assuming it would be in the almirah? They would have put in fixed deposit. Or bought something with it. Or gone on a vacation. All of which would add to the GDP.

Also consider the fact that LIC prices now are far less than the IPO price - i.e. it has eroded a huge amount of wealth.

Originally Posted by Mustang_Boss

Ok. GDP per capita of our country will never exceed the west. They can print their $$$ and Euros, but no one will accept our currency for trade.

I think there are atleast 80 or more countries ahead of us in Per capita whose currencies are not accepted for trade.

Also, have you considered that it's because they are richer that their currency is accepted, rather than the opposite - i.e. they are rich because their currency is accepted.

Originally Posted by V.Narayan

And yet the ADB says they have a massively lower proportion under extreme poverty!!!! GDP per capita data in the chart below. data for 2021. IMF.

I already said that both Bangladesh & Pakistan are poorer countries than us (i.e less per capita). However, that doesn't preclude them from having lesser extreme poverty. It's a question of distribution of the same wealth across the population - i.e lesser inequity. May be they do more welfare. I really have no idea.

Our wealth has always been concentrated among the top. And that has increased every year. Even during the last 2 years, the rich became richer & poor became poorer.

Originally Posted by V.Narayan

When we don't know who the members are and what they do for a living snarky comments don't help :-)

My bad! Sorry about that. It wasn't directed particularly at the person I replied to. It's just that this India #x GDP always gets my goat considering it's a meaningless stat for a huge majority of the population who will still be poor even if we becomes #(x-1).

[Mustang_Boss]

Originally Posted by carboy

Why are you assuming it would be in the almirah? They would have put in fixed deposit. Or bought something with it. Or gone on a vacation. All of which would add to the GDP.

Also consider the fact that LIC prices now are far less than the IPO price - i.e. it has eroded a huge amount of wealth.



I think there are atleast 80 or more countries ahead of us in Per capita whose currencies are not accepted for trade.

Also, have you considered that it's because they are richer that their currency is accepted, rather than the opposite - i.e. they are rich because their currency is accepted.

Looking from the other side of the Coin,
If the price has come down, some sold it heaviy and the number of buyers are less than the number of sellers, hence the value came down. But when viewed as a transaction, some made money and those who held lost. Which means for some, the value was added and it gets converted into additional taxes.


Currencies
India cannot accept currency of Bangladesh/pakistan/Afghanistan and some other middle eastern countries, not because their currency is bad or not worth. but because of religious reasons, perception of suprimacy & the amount of hatred from fewllow citizens on the ruling party.

Because of similar reasons, Japan, China and South Korea cannot accept each other's currencies.
Mayanmar cannot accept bangladesh's currency and Malaysia cannot accept Singapore's as primary.
Germany cannot accept Poland's or that of Italy's for similar reasons. Today, these all countries use Euro though.

So, acceptance of a currency has nothing to do with Country being rich or poor. I hope this is clear to you now.

Bud, criticism should be healthy & not provocative. Educate others and enlighten yourself. Thank you.