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India’s growth rate overestimated by 2.5%, says study by former chief economic advisor

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4 years ago

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Wealth Indian currency

[vc_row][vc_column][vc_column_text]A new study by none less than India’s former Chief Economic Advisor Arvind Subramanian may have punctured India’s much vaunted status as world’s fastest growing economy.

Titled India’s GDP Mis-estimation: Likelihood, Magnitudes, Mechanisms, and Implications, Subramanian’s working paper for the Center for International Development at Harvard University, US, is critical of Indian statisticians and the way India’s GDP growth has been estimated after 2011-12.

It says the expansion was overestimated by as much as 2.5 per cent between 2011 and 2017, that is, during UPA-2 and Prime Minister Narendra Modi’s first term. Rather than growing at about 7% a year in that period, growth was about 4.5%.However, it doesn’t break this down by year.

But this means India’s claim of being the world’s fastest-growing major economy may not have been true.

“The Indian policy automobile has been navigated with a faulty, possibly broken, speedometer,” says Arvind Subramanian, who was Chief Economic Adviser for Prime Minister Narendra Modi’s government between 2014 and 2018. He asserts that the overestimation is not political.

“My new research suggests that post-global financial crisis, the heady narrative of a guns-blazing India – that statisticians led us to believe – may have to cede to a more realistic one of an economy growing solidly but not spectacularly,” Subramanian wrote in The Indian Express, attributing the overestimation to “methodological changes”.

The previous Congress-led government changed the methodology in calculating gross domestic product in 2012. One of the key adjustments was a shift to financial accounts-based data compiled by the Ministry of Corporate Affairs, from volume-based data previously. This made GDP estimates more sensitive to price changes, in a period of lower oil prices, according to the research paper. Rather than deflate input values by input prices, the new methodology deflated these values by output prices, which could have overstated manufacturing growth.

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Subramanian carried out an experiment, one that many other economists have also been doing for India: he made an index of other data sources that could reflect what is happening in the actual economy, such as electricity consumption, two-wheeler sales, index of industrial production and so on. None of these were figures that came from the Central Statistical Office, which compiles the GDP statistics.

Subramanian’s index found that these indicators tend to move closely in step with the GDP number between 2001-’02 and 2011-’12. But from 2011-’12 to 2016-’17, there are huge gaps between them. The paper uses various methods, including indicators from India and other countries, to test mis-estimation in growth, all of which confirm the belief that GDP growth was over-estimated.

Subramanian insists that the paper is only the start, and much more research needs to be done. But, in looking at the data, he does offer one explanation for why the new methodology of calculating GDP might have thrown out bad data.

Based on the experiment, Subramanian finds that before 2011, the official estimates of manufacturing move along with other indicators, like the index of industrial production. But under the new methodology, this connection is completely broken.

The reasons for this are more complicated but, to put it simply, the paper suggests that the new GDP methodology does not properly take into account how changes in global oil prices (and possibly other “input” commodities) might affect actual figures. Ultimately, this means that the new GDP methodology has a completely flawed understanding of manufacturing numbers.

But this only explains about a 1 percentage point of the overall 2.5 percentage point over-estimation. More research is needed to understand what else is going wrong.

Subramanian points out that this isn’t just a matter of denting India’s reputation. Bad data would also affect policymaking For example, the Reserve Bank of India might have cut interest rates much earlier if it was known that GDP growth was that much lower, and the government might have moved much quicker to resolve the banking crisis or agricultural concerns.

According to the former top economic adviser, the popular narrative has been one of “jobless growth”, hinting at a disconnect between fundamental dynamism and key outcomes. “In reality,weak job growth and acute financial sector stress may have simply stemmed from modest GDP growth. Going forward, there must be reform urgency stemming from the new knowledge that growth has been tepid, not torrid; And from recognising that growth of 4.5 per cent will make the government’s laudable inclusion agenda difficult to sustain fiscally.”

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Dr Subramanian explains that when he was working with the government, he had grappled with conflicting data and “raised doubts frequently” with the government. “But the time and space afforded by being outside government were necessary to undertake months of very detailed research, including subjecting it to careful scrutiny and cross-checking by numerous colleagues, to generate robust evidence,” he says.

The paper has three recommendations for what India needs to do:

India must “restore growth as a key policy objective”.

India must “restore the reputational damage suffered to data generation,” not only by giving statutory independence to the National Statistical Commission (which currently has no independent members) but also by hiring people with “stellar technical and personal reputations”.

The entire methodology and implementation for GDP estimation must be revisited by an independent task force, comprising both national and international experts, with impeccable technical credentials and demonstrable stature.

On the other hand, the politically appointed NITI Aayog was seen as interfering with India’s statistical operations. Recently, word has emerged that the BJP is thinking about a new law to merge the main bodies that work on statistics, potentially undermining their independence.

 

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OYO founder Ritesh Agarwal’s father falls to his death from Gurugram high-rise, days after son’s wedding

According to the reports, he fell from the 20th floor of the building.

Published

3 weeks ago

on

March 10, 2023

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OYO founder Ritesh Agarwal's father falls to his death from Gurugram high-rise, days after son's wedding

Hospitality chain OYO founder Ritesh Agarwal’s father Ramesh Agarwal died after falling from a high-rise building in Haryana’s Gurugram on Saturday afternoon. According to the reports, he fell from the 20th floor of the building.

The incident took place at around 1 pm at the DLF’s The Crest Society in Gurugram’s Sector 54. He was immediately rushed to the Paras Hospital for treatment, however, the doctors declared him brought dead.

The police reached the spot as soon as they received the information. At that time, Ramesh Agarwal’s wife, his son, and his daughter-in-law were in the apartment, the officer said, adding no suicide note had been found, and neither had the family complained about the death.

The 30-year-old billionaire issued a statement that reads, With a heavy heart, he and his family would like to share that their guiding light and strength, his father, Shri Ramesh Agarwal passed away on 10 March. He said his father lived a full life and inspired him and so many of us, every single day.

He further wrote, His death is a tremendous loss for their family, adding that his father’s compassion and warmth saw them through their toughest times and carried them forward. His words will resonate deep in their hearts, he added. He requested everyone to respect their privacy in this time of grief.

The tragic incident was reported three days after Agarwal got married to Geetansha Sood, the director of Farmation Ventures in New Delhi. Ramesh Agarwal was last seen at a wedding reception of his son on March 7 at the five-star Taj Palace hotel in Delhi.

The high-profile ceremony was attended by several leading figures including Union Finance Minister Nirmala Sitharaman, Delhi Chief Minister Arvind Kejriwal, Softbank chairman Masayoshi Son and Paytm founder Vijay Shekhar Sharma, among others.

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Adani-Hindenburg row: Supreme Court orders SEBI to finish probe within two months, sets up independent expert panel

Released on January 24, the Hindenburg Research report claimed “brazen accounting fraud” and “stock manipulation” by the Gautam Adani-led group.

Published

4 weeks ago

on

March 2, 2023

By

Gautam Adani

The Supreme Court on Thursday ordered SEBI to complete the probe into the Adani-Hindenburg row within two months. The Top Court also set up an independent experts committee which will be headed by its retired judge Abhay Manohar Sapre.

The other members of the panel include Nandan Nilekani, KV Kamath, OP Bhat, JP Devdhar, and advocate Somasekhar Sundaresan who have been appointed by a bench comprising CJI DY Chandrachud, Justice PS Narasimha, and Justice JB Pardiwala.

The Apex Court observed that the cases concern the loss of investor wealth over the past few weeks due to a massive decline of Adani group companies following the Hindenburg Research report asked SEBI to examine if there was a violation of market regulations, short-selling norms or stock price manipulation. On February 10, the Court directed the SEBI to suggest measures that could be implemented to protect Indian investors from market volatility.

Read Also: Landmark Supreme Court verdict orders new mode of appointment of Election Commissioners

On February 17, the Supreme Court decided to constitute an expert committee to inspect if the regulatory mechanism needed to be strengthened to protect Indian investors from market volatility showed in the Hindenburg Research report on Adani Group.

Earlier, the bench had refused to accept the names put forth by the Central Government in a sealed cover for inclusion in the proposed committee. The Top Court had said it will select the experts and maintain full transparency as it would amount to a government-constituted committee if they take names given by the government.

Released on January 24, the Hindenburg Research report claimed “brazen accounting fraud” and “stock manipulation” by the Gautam Adani-led group.

Although the report was rejected by the conglomerate as unresearched and maliciously mischievous, it sparked a massive roar and political debates on social media which led to the firm losing over $120 billion in days and forcing the cancellation of a Rs 20,000 crore secondary share sale.

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Will the gaming token rebound?

Published

4 weeks ago

on

March 2, 2023

By

Video Games

Since its all-time high in May, the smooth love potion token’s (SLP) price has dropped by over 80%. Is there hope that the SLP coin price will recover or will it keep losing value? This article looks at the current status of the project, the most recent information regarding SLP coin, and some forecasts regarding the coin’s future value of one of the most famous collectibles card game.

SLP creates an in-game economy on Axie Infinity

Gamers in the Axie Infinity world can win the smooth love potion token (also dubbed a “small love potion”) as a reward for their efforts. SLP is indeed an ERC-20 coin, and the blockchain on which Pokémon-inspired Axie Infinity operates is Ethereum’s. To create the non-fungible tokens (NFTs) known as Axies, which can be traded with other participants in the Axie Infinity Marketplace, players must spend SLP. Those who wish to participate in the game must first acquire some Axies. The number of SLP tokens that can ever exist is unrestricted.

The game’s meteoric rise in popularity has spawned a “scholarship” model, wherein “managers” lease the Axies to “scholars,” who play the game professionally and use them to make money.

As the source code for Axie Infinity is freely available, third parties can use the game’s art and genetic data to create their own games and experiences.

According to DappRadar, Axie Infinity, an NFT collection released in 2018 by gaming company Sky Mavis, has eclipsed CryptoPunks, among the first big NFT collections released in 2017, in terms of total traded volume, with over $2.84 billion compared to $1.56 billion for CryptoKitties.

Between July 2020 and April 2021, the value of one SLP token was worth between $0.0095 and $0.01. In a short amount of time, it climbed to a peak of $0.4191 as of May 1 before rapidly falling to its previous low of $0.1477 on May 12.

The price jumped and fell back two times more in May, increasing volatility. In June, SLP traded at $0.011, but by July, it had recovered to $0.4088. As of September 21st, the price had fallen to $0.0553, and throughout the month of October it fluctuated between $0.05 and $0.10. The price of one coin was $0.0696 as of November 1st, when this article was written.

On September 23rd, developers reduced the AXS cost from 2 to 1 and increased the SLP cost from 600 for breeding a single Axie to 6,300 for breeding six Axies. The Axie Infinity website states that the fee was changed in comment to a growth slowdown due to worries over a disparity in the rate at which SLP tokens were being minted and burned everyday, large volatility in the breeding fee because of fluctuation in the value of AXS and smooth love potion, and the increase in AXS to 80% of such breeding fee.

Prolonged success of the SLP,  the Axie economy will thrive if more people start playing Axie Infinity, if there is increased demand for Axies, and if the play-to-earn concept receives outside support.

Sky Mavis is working on a DEX for Axie Infinity’s Ronin, a sidechain connected to the Ethereum network, so that users may conduct transactions without incurring gas costs. The new fighting system they are creating will debut an Axie Infinity game demo before any financial choices are made.

The designers are considering options for handing over control of the Axie Infinity economy to “intelligent devices or informed users of the Axie network.”

So, what would some experts anticipate the price of an SLP token will be in the future?

Do you anticipate a rebound of price for SLP tokens in the near future?

Somewhere at time of writing, the technical analysis of SLP’s price on CoinCodex was pessimistic, with the token trading at $0.0969. Only three oscillator indicators were producing positive signals, compared to twenty-three that were bearish. CoinCodex forecasts that the price of the smooth love potion token will fall to $0.0642 on November 6th.

Based on their analysis of historical data, the analysts at Wallet Investor estimate that the price of SLP will fall from its current level of $0.07 to an average of $0.0073 by the closing time of the year. It predicted that the price will stay below $0.01 throughout 2022, averaging $0.0098 by year’s end. The site anticipated that by 2025’s conclusion, SLP’s price might have fallen to about $0.0085.

But DigitalCoin remained optimistic about SLP’s long-term prospects, projecting that the token’s average price would increase to $0.1207 in 2022 from $0.1014 in 2021, and then to $0.2125 in 2025. The site also estimated that by 2028, the average price of SLP might be $0.3213, with a high of $0.3435.

Additionally, PricePrediction’s SLP long-term prognosis was optimistic, with the average price predicted to increase from $0.35 throughout 2021 to $0.48 by 2022, $1.52 in 2025, and $9.08 throughout 2030. Be aware that crypto remain extremely unpredictable, making it tough to anticipate how much a coin will be worth in a week or even a month. As a result, analysts are fallible and often provide inaccurate forecasts.

Prior investing money, you should perform your own study and think carefully about the market’s current state, as well as latest events, fundamental and technical analysis, and professional opinion. Also, only put up money that you can manage to lose.

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