India's Economy May Expand 9.7% This Year, More Than Forecast, IMF Says

[Von Hölle]

Hmm...Why no one here seems to be worried about inflation? What good will 9.7% growth do to Indians if the consumer prices go up 13.2 percent?

On the contrary inflation is being predicted to come down to 8%.

 

[Nomenclature]

On the contrary inflation is being predicted to come down to 8%.

IMF is still predicting a 13.2% increase in consumer prices though, since we're discussing IMF's prediction on GDP growth, it's only fitting we use IMF prediction on inflation.

We can't pick a high GDP forecast from IMF and couple it with a lower inflation forecast from somewhere else.

 

[Von Hölle]

IMF is still predicting a 13.2% increase in consumer prices though, since we're discussing IMF's prediction on GDP growth, it's only fitting we use IMF prediction on inflation.

We can't pick a high GDP forecast from IMF and couple it with a lower inflation forecast from somewhere else.

IMF does not run Indian economy, Indian govt does and it up to Indian govt to control the inflation ...they can control inflation by tighter fiscal discipline and tweaking of interest rates and it is their objective this year to bring inflation down to 8% ..while keeping growth in range of 9%.

 

[Water Car Engineer]

 

[Water Car Engineer]

India's economy will soon be on its high-growth path of nine per cent, according to Finance Minister Pranab Mukherjee.

Addressing the seventh India Investment Forum meeting at New York on Wednesday, he said the country managed to come out of the adverse impact of the global meltdown and was marching toward the high-growth path.

India's economy recorded a growth of 6.7 per cent in 2008-09 despite the global economic slowdown. The growth was nine per cent in the preceding three years.

Mukherjee said with the help of timely broad-based counter cyclical monetary policy support, the economy rebound to 7.4 per cent in 2009-10 and the GDP for the current fiscal was 8.8 per cent for the quarter ended June 2010. The economy would be back on track to cross the double digit growth barrier in a couple of years, he added.

Mukherjee said with the support of this growth, the nation's main objective was to make the development process more inclusive, strengthen food security, improve education opportunities and health facilities both in rural and urban areas.

India's Economy On High-Growth Path Soon: Minister

 

[Water Car Engineer]

While "only" the second-fastest growing major economy in the world, India's growth story is at this point well-documented and that is of course fueling impressive gains for Indian equities and the ETFs that track those equities.

The Bombay Sensex is up 18% this year and foreign investors have poured fresh cash into Indian stocks to the tune of $21 billion.

Well, the hits just keep on coming. Foreign fund inflows have surged 59 percent this year, according to data from the Securities and Exchange Board of India compiled by Bloomberg and the Sensex is closing in on its record high set in January 2008.

Add to that the expectations of Prashant Jain, chief investment officer at HDFC Asset Management Co., the nation's second-biggest money manager. Jain told Bloomberg that Indian could return as much as 20% over the next three to five years.

Time to update the list of the Professor's preferred India-specific ETFs.

1) Direxion Daily India Bull 2X Shares (NYSE: INDL):
INDL has only been trading for a few months, so the volume leaves a bit to be desired at this point, but given the popularity of leveraged ETFs and India-specific funds, that is bound to change.

INDL is the only leveraged India-specific play. Obviously, you cannot hold this fund for years on end, but it should prove to be a great tool for the nimble trader to play India's growth with.

2) WisdomTree India Earnings ETF (NYSE: EPI):
Consider EPI a tortoise among emerging markets ETFs. The ATR on this fund is just under 40 cents a day, but no one should complain given the parabolic move it has been on lately. Probably the best way to play India's largest companies.

3) Emerging Global Shares Index Small Cap ETF (NYSE: SCIN):
SCIN tracks the Indxx India Small Cap Index, which is home to 75 companies. The ETF is another new kid on the block, but is up more than 7% in two months of trading. The expense ratio is a tad high at 0.85%, making it a difficult buy-and-hold proposition, but small-caps are sure to benefit as India's GDP continues to surge.

4) Market Vectors India Small-Cap ETF (NYSE: SCIF):
Like SCIN, SCIF is new to the game, but there are some differences. SCIF tracks 120 companies, but has the same expense ratio as SCIN. SCIF has attracted about $13 million in assets in just six weeks of trading.

Tell Me More: India's Economy Only Starting To Blossom | Benzinga.com

 

[MYSTIC]

Exporters in our country need to be promoted the way they are in China. At the moment our manufacturing industry is about 10-20 years behind China.

 

[su-47]

Well done India. Despite threats of a double-dip recession in USA and economic slowdown, we have shown our rise.

One area where we can make a significant improvement is manufacturing. Our infrastructure has grown considerably, and i think our economy is ready to take a good chunk of the manufacturing market. Vietnam had recently taken a slice of of the manufacturing pie due to low prices (saw it on Bloomberg), and i think we can do the same.

In order to increase and sustain our economic growth, we have to expand our manufacturing base as well, and reduce trade deficit. China has shown the world the power of manufacturing and I think with increasing infrastructure development, we can make a significant impact on that market.

Hmm...Why no one here seems to be worried about inflation? What good will 9.7% growth do to Indians if the consumer prices go up 13.2 percent?

Good question. Inflation is a bit of a concern, with some sites showing it at around 8% and others at 13.2%. But nonetheless it is possible to keep inflation around 10%, which is normal for a growing economy.

Also, even if inflation is around 13.2%, India's Real GDP grew by 6.5% as per this index
India GDP - real growth rate - Economy

And here is China's Real economic growth, for comparison:
China GDP - real growth rate - Economy

So overall, the performance of the Indian economy has been pretty good

 

[Water Car Engineer]

@MYSTIC you are really old. With only 10 posts. Thanks for posting on my thread. lol

I remember in 2006 people were freaking out that India was going to get 7.5% growth. Lol

 

[Speeder 2]

Yet how India grows, may I ask?

Where this so called +9% will come, or come, from?


China's growth mainly comes from:

1. the biggest govt investment/stimulus in the world ( as % of GDP) - the 2nd biggest spending in absolute term after the US , coupled with

2 world's #1 export machine, and together with

3 soon to be world's 2rd largest comsumer market bypassing Japan in the coming years according to Stanford professor Michael Spence (Nobel laureate in economics).

So this 'story" goes that India's imminent growth is almost the same as China's as the current data and the forecast suggest.

Since India has tiny govenment spending, a tiny export machine and a tiny domestic consumer market compared to China, the Question is obvious and pretty simple one :

WHERE India's +9% growth come, or will come, from ???


The Answer is pretty simple and straightforward as well:

India's growth is artificially "cooked".

There is no other explaination.

Why so? There are 2 obvious evidences to show that:

1. India's GDP deflator, the one used in calculation of its nominal GDP, has been severely underestimated by the Indian bookmakers during the past decade. That's why there is a relatively unrealistic HUGE gap between India's PPP and its nominal GDP.

2. As Nomenclature mentioned earlier, India's growth has been on the expenses of ridiculously high inflation, 2 double digit inflation in fact - at both CPI and wholesale levels. This is unique amongst all world's top 15 economies.


To put it simple, India's "growth" has been "eaten" already by its inflations.

It is "man-made" hence "cooked" by accounting bookmakers and Indian govt monetary policy makers via shortsighted hyper monetary polices which aim at boosting short-term growth on the expense of mid/long term one.

Hence India's "+9% growth" is not , or won't be, sustainable, indeed it is a walking timebomb.

This's also why, despite of all these "high growth" projected in India, its FDI is pathetically low compared to China.


By Speeder 2 (Ph.D in Economics, 2010)

 

[Von Hölle]

Yet how India grows, may I ask?

Where this so called +9% will come, or come, from?


China's growth mainly comes from:

1. the biggest govt investment/stimulus in the world ( as % of GDP) - the 2nd biggest spending in absolute term after the US , coupled with

2 world's #1 export machine, and together with

3 soon to be world's 2rd largest comsumer market bypassing Japan in the coming years according to Stanford professor Michael Spence (Nobel laureate in economics).

So this 'story" goes that India's imminent growth is almost the same as China's as the current data and the forecast suggest.

Since India has tiny govenment spending, a tiny export machine and a tiny domestic consumer market compared to China, the Question is obvious and pretty simple one :

WHERE India's +9% growth come, or will come, from ???


The Answer is pretty simple and straightforward as well:

India's growth is artificially "cooked".

There is no other explaination.

Why so? There are 2 obvious evidences to show that:

1. India's GDP deflator, the one used in calculation of its nominal GDP, has been severely underestimated by the Indian bookmakers during the past decade. That's why there is a relatively unrealistic HUGE gap between India's PPP and its nominal GDP.

2. As Nomenclature mentioned earlier, India's growth has been on the expenses of ridiculously high inflation, 2 double digit inflation in fact - at both CPI and wholesale levels. This is unique amongst all world's top 15 economies.


To put it simple, India's "growth" has been "eaten" already by its inflations.

It is "man-made" hence "cooked" by accounting bookmakers and Indian govt monetary policy makers via shortsighted hyper monetary polices which aim at boosting short-term growth on the expense of mid/long term one.

Hence India's "+9% growth" is not , or won't be, sustainable, indeed it is a walking timebomb.

This's also why, despite of all these "high growth" projected in India, its FDI is pathetically low compared to China.


By Speeder 2 (Ph.D in Economics, 2010)

Answer to your question is your post itself.

You say China's growth comes from govt stimulus whereas you forget Indian growth comes from Private sector investment..which is clearly visible in two fastest expanding sectors of Indian economy services and industry(including manufacturing, mining etc)

Unlike China which is export based economy, Indian economy is consumer based with the rapidly expanding middle class(over 350 million)..demand is always increasing.

Inflation which was in double digits last year(as an aftereffect of global oil prices..because the fuel prices are govt controlled hence entire burden is gently passed onto the consumer) is down to 8.5 %.

As far it being sustainable or not..as long as middles class keeps growing(which in turn will grow if economy keeps growing) the economy will grow.

Infact consumption based economies are far more stable than export based economies

 

[Speeder 2]

^^^

“you forget India’s private sector?” Pathetically tiny compared to China’s

“India’s service sector “ - One of the biggest myths behind India “superpower” wet dream.

“Unlike China is export based..” Lie 1.

“Indian economy … rapidly expanding middle class (over 350 million)” Lie 2, unless your Indian “middle class” defined as one who is able to feed 3X a day. ( the EU has about 350 million middle class btw. Then what is the GDP of the EU compared to India’s? )

“Inflation… is down to 8.5 %”. Lie 3.

“Infact consumption based economies are far more stable than export based economies” Lie 4.

Your knowledge shown tells that you’re no more than a high school dropout quite obviously. Don’t waste my time. Oh, have you indians become that pathetic to call yourself whiteman "von" and "van" now?

 

[Speeder 2]

btw, I am eagerly anticipating another "von Diksh!t" on the forum ...

 

[Von Hölle]

Your post is lacking in common sense and you calling proclaiming yourself to be a PHD !!..or maybe its not a requirement in your field ..but then you wouldn't know about it.

“you forget India’s private sector?” Pathetically tiny compared to China’s

You are comparing China's current economy with India's (where as you know China's economy 4 times bigger) why don't you draw out comparison..when Chinese economy was $1.3 trillion??..what was the contribution of private sector then? seems

“India’s service sector “ - One of the biggest myths behind India “superpower” wet dream.

Perhaps we all be blessed if you can shower us with your knowledge of Indian service sector?

“Unlike China is export based..” Lie 1.

Chinese GDP of 5 trillion, 1.2 trillion comes from exports..which other sector singularly holds an equivalent share?

“Indian economy … rapidly expanding middle class (over 350 million)” Lie 2, unless your Indian “middle class” defined as one who is able to feed 3X a day. ( the EU has about 350 million middle class btw. Then what is the GDP of the EU compared to India’s? )

Another gem from you.. Comparing entire EU's middle class with India..so what is EU's middle class growth rate?

“Inflation… is down to 8.5 %”.

Lie 3.

As far inflation is concerned .
India's August inflation eases to 8.5 per cent - Business News - IBNLive

“Infact consumption based economies are far more stable than export based economies” Lie 4.

Why, aren't export based economies vulnerable to global economic atmosphere??..or have you written a new thesis on it?

Your knowledge shown tells that you’re no more than a high school dropout quite obviously. Don’t waste my time. Oh, have you indians become that pathetic to call yourself whiteman "von" and "van" now?

Thats pretty rich coming from a Chinese..who calls himself a Speedo..why, are you ashamed of your Chinese name? or you like masquerading a white supremacist??!!

Clearly you have a racist streak to you or is it your ego ..which stops you from making civilized debate?

 

[Von Hölle]

btw, I am eagerly anticipating another "von Diksh!t" on the forum ...

You tired of hearing Boo Dicksons, Dingbangs, Ho(s) back home?