Budget, Business and Bandh... 2...

There is not much difference between nominal gdp and real gdp as such, growth rate would remain same... because inflation has only changed little... the formula for calculating real gdp is nominal gdp/deflator... INDIA has grown 10.8% in the current year... base year would also be deflated... There is not much difference between nominal gdp and real gdp growth rate when inflation had been on the lowside... in this situation nominal gdp and real gdp would remain same... nominal gdp and real gdp growth rate too...


GDP Constant Prices in India is expected to be 38147.00 INR Billion by the end of this quarter in 2019 and 34427 INR Billion in 2018, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate GDP Constant Prices in India to stand at 38153.00 in 12 months time. In the long-term, the India GDP Constant Prices is projected to trend around 42465.00 INR Billion in 2020, according to our econometric models. According to the above data the INDIAN economy expended 10.8% in 2019 and would expand 11%% in 2020...


If inflation is 6% how there could be a slowdown... Recession is often market by a period of low demand and prices and high unemployment and low growth and vice-versa... A recent study shows that prices and growth are positively correlated... Low growth means low demand and low inflation and high growth means high demand and prices... INDIA is growing 5% every quarter and 20% every year...


Banks have been recapitalised by several lakh crores and IBC has fastened the resolution process... Stressed assets have comedown sharply... Rs 120 lkh crore investment in the infra has potential to consume alot of unskilled labour... INDIA is not in a recession, just a slowdown in the growth rate, due to an election year, people held investment due to a regular budget... which is likely to catchup pace soon... OMOs are also a way to capitalise banks, we saw in the US during QE... Banking is with the RBI and recapitalisation, too... Bailout in the US was widely criticised in the US, bailing out banks for their excess...


The 50% of the economy is unorganised which, if formalised could double the growth... there is a vast service sector of which we have little idea, both, in the rural and urban areas, no account... business must slowly increase investment to reduce their weighted average cost, because no body can predict a clear bottom of the interest rate cuts by the rbi... inflation has already reduced real interest rates and money is cheap...


According to chain based index method for calculating real GDP, the next year's growth rate would be 9.5%... The economy would achieve last year GDP 4.5% plus 5% next year... on the 2017-18 base....


Rationalising the tax structure to increase competitiveness and demand in and of the INDIAN Economy and growth is a crucial reform when the insiders want to reduce tax terrorism which could also increase scale and revenue... The gov must comeup with any idea to reduce indirect taxes paid by the poor people... Our late former FM Shri Arun Jaitley once realised the problem of indirect taxes paid by the poor...


Land, labour, capital and tax reforms must be high on the wishlist to increase the competitiveness and productivity and demand and growth... Lower consumer prices is the goal of the above reforms... The productivity and competitiveness, both point to lower prices for the consumers....


90% wealth share is with top 1%... Income tax exemption may be given to rest 99% at a very low cost... who have a higher MPC... Reservation under economically backward has already been given to upper cast having Rs 8 lkh yearly income which is a very large group... covering 80% tax payers and voters...


Marginal propensity to consume is higher for lower and middle class... Lower tax would increase real incomes, both consumption and savings would increase, lower interest rate could increase investment and could further boost real incomes, low inflation could further increase domestic real exchange rate... and could further increase exports due to internal devaluation... All through increase in the value of money....


Investment in storage and the farmers' ability to hold and increase supply during high prices and fewer middleman could increase their income... Irrigation and protection from floods could help reduce risk associated with investment in the agriculture...


Public spending during slowdown is the Keynesian prescription which is a right thing to do when the private sector has put investment on hold, the Rating Agencies must realise, higher inflation and interest rate expectations may crowd in private investment... A higher external borrowing plan from the US or Japan or Europe for infra and const could further help improve the gov finances.. and rating agencies and investors sentiment...


During last recession (2008) the fiscal deficit target breached 6%, though this time it is reasonable to contain it at 4% to boost the economy without overheating, supply side for food and fuel must be strengthened ,during higher unemployment and slow growth compared to the potential...


FPI must understand that higher prices/inflation are good for margins/earnings and share prices, though exchange rate risk might be hedged through derivatives... Higher prices are good for supply and investment... Though on correction people would demand more...


Last Budget was off date just after the elections... Budget must include promises made in the Manifesto... Credibility of Politicians is paramount...



Higher fiscal deficit could increase price expectations and spending... Productivity and lower prices and higher demand through public spending like more investment in skills and production, supply would increase too, could help increase demand and growth and revenue... Higher fiscal debt of Rs 2 lkh crore during slowdown is good idea to crowd in private investment... More disinvestment would increase capacity too invest in productivity and increase real wages and incomes, profits too... Disinv. target is 3 lkh crore... The Gov must be able to clarify on popular expectations from the budget... so people do not delay spending due to uncertainty...


Since the INDIAN bond market is under-developed, means supply of bonds is low and lower money supply has increased bond yields... ....Opposite of QE... More money supply in the Bond market could reduce bond yields as FDs would be substituted for bonds and increase interest rate on FDs which could increase bond price expectations, but also increase interest rate on FDs and and more deposits... for short term bonds... Low supply of bonds has increased interest rate on bonds... For investors they should allocate in both the assets to avoid loss... that would work in both upcycle and downcycle, too... banks too....


The Gov may impose Rs 1 per person perday perfamily tax on food on ALL to create a precautionary fund to stabilize prices in the economy... By this Gov could collect 47450 billion INR peryear...


We must be able to know why people are fleeing from a religious majority into INDIA brings them into suspicion... And, the issue must be raised universally... INDIA cannot guaranty free citizenship to all necessarily... And, ask other countries to share the burden of illegal refugees...


Policemen have specials right provided by the Law or Constitution of the country... They could move to the court of law against violence in the name of the freedom speech and protest in decent... Police have human rights too... Everybody knows what happened 2 JMs... Jamia Milia and Jama Masjid... There already exists a Media...


FM must fulfill popular wishes/expectations within the budget... Some extra borrowing and spending during slowdown could help increase demand; ultimately it would go to the people's pocket... Higher demand and price expectations could increase growth expectations... expectations lead to further expectations from the business and consumer community.... The Gov has reduced taxes like Corporate Tax and indirect tax, there has been little progress on overall productivity and demand and productivity and demand and prices, little transmission to consumer prices to increase real wages and incomes and profits too... So, there must be a direct tax cut within the budget to increase (real) income and demand and growth...


The Fed is close to r* or neutral or zero real interest rate and the labour market is healthy, the Fed may continue its neutral or stable stance, which could help stabilise inflation/price expectations and spending... Changes in inflation/price-level has the ability to increase demand and supply and employment and investment and consumption and savings in the economy, though if people expect demand/supply stimuli they may hold either demand or supply that might increase volatility... .. that might increase volatility... Nonetheless, expectations are subject to uncertainty and change and they also reinforce prices and expectations and demand and supply... Lower prices increase demand and price expectations and higher prices increase supply and lower price expectations... Prices help clear excess demand and supply in the economy... and expectations may be self-fulfilling and could increase volatility... People speculate on prices and a general expectation is formed by them which might be uncertain due to several factors...

Budget, Business and Bandh...

The gov and rbi could do little to lower or increase prices to clear excess supply/demand and even it may delay spending and growth... Other things remaining stable, if the rbi maintains a neutral stance or status quo, it would help stabilise demand/supply and prices and speculation by consumers and investors and producers... But, if it increases interest rate... supply and employment and demand would go down which would further increase price or inflation and expectations and worsen unemployment which could prolong adjustment.... and vice versa...

Assuming inflation at the target, the rbi may decide nominal interest rate as per the demand and supply of money in the market or let the market decide... Money supply has been too much regulated... or peg repo rates to the bonds, short and long... Banks must match interest rate with the bond market rates....

Transport/oil demand and prices is the chief reflector of demand in the economy and therefore... Revenue from oil has increased in the past few years since oil prices fell from over $ 110 per barrel to $ 60-70... But taxes remained more or less same... which could help reduce deficit... It is also an indicator of demand in the economy... and they have showed 15% growth this year…

…..when INDIA exports more petroleum products than it imports...

Including oil, real estate, electricity and booze in the GST could reduce uncertainty over investment as these have a very large base which could help shore-up the GST revenue... Land, labour and capital reforms could further increase certainty or predictability for business...

If banks pass on the rate cuts to the borrower and invest profits in gov and corporate bonds it could compensate loss, due to lower interest rates... More money supply would reduce interest rate and could increase spending... No crowd out, but crowd in... Higher bond prices would benefit investors... Gov would pay less in interest payment and would also increase gov spending...

Lower income tax could increase consumption and saving/investment and demand and tax revenue as the growth revives...Hope it is implemented soon and not just an expectation...

If banks do not pass rate cuts, corporate lower taxes, business gst and gov oil prices... It really becomes difficult to increase demand, people expect them and they are delaying spending… The RBI and Gov are on the same page... Total tax exemption upto Rs 8 lkh is expected as LTCGT cut... or only after 3 years......

The gov needs to increase spending also spending like lower tax during slow down and consolidation during high growth to control demand/supply and prices or unemployment and inflation which may delay spending from the expectations channel... People speculate on prices, both lower and higher... Lower prices increase the value of money for wagers and higher prices increase profits, but they would help if it really happens... Otherwise we lose... growth may be delayed too due to hold on investment...

The 1% has 90% share in the product (GDP)... It would help (lower income tax).... to the common man... transmission to consumers prices could increase the chance of a bounce back, real wages and incomes would increase... Higher rural income would further boost demand... Low prices would reduce the cost of investment lower prices lower wage demand and competitiveness... Lower borrowing cost would be expansionary, too....

Unskilled workers have been in large supply which has depressed productivity and real wages... Providing more skills could increase productivity and wages... Though, over supply of skilled in sectors like medical and engineering could also lower demand of such professionals relative to supply... CAs and CSs supply have been limited which has pushed up demand and incomes... the same could be applied in agriculture and construction...

The gov may put a skills cess on the superrich... and provide unskilled skills based on the industry demand and supply only accordingly...

The US can always print currency and there is no scope for default and settles imports in the USD... That is why dollar is safe (heaven currency)... Everybody wants the US tech and USD... weapons, too... and, now shale, everybody want it because it is cheap... Same with China which has queued Renmibi to emerge as a substitute for USD, everybody wants Chinese goods, but it uses USD for payment to gain USD and depreciation to gain competitiveness through exchange rate... Any economy which has high demand for its exports should settle trade in its own currency... imports too... would have a stable currency compared to others, like the US... Its demand and price would increase...

There is no such certainty that when recession will strike in the US and what could be the bottom and how long it would take? But, there is scope that the Fed would follow neutral or zero real interest rate, nominal interest rate minus inflation, or it would balance inflation with nominal interest rate cancelling out each other, to keep the value of money...

Recently, Gita Gopinath said that in 2020 the real rate of growth of the GDP would be 4.8% … The 4.8% is the average of real-GDP growth rate of the four quarters... The total growth rate of the four quarters would be 4.8% x 4 equals 19.20%... no doubt in one or two quarters growth rate could cross 6 and even 7 %...

Why identification of genuine citizens and refugees is being opposed, especially when they are majority from the terrorism affected areas like Pak... and Afgha...? How would the Gov provide benefits to genuine poor citizens and refugees, according to the Act, INDIA if they are left unidentified? What could be wrong just with identification?

….ye jo dalit-muslim gathjod, jiski baat tukde-tukde gang k sapna hai... desh ko barbaad kar dega... caa nahin hoga to jaroort ka paisa garib tak kaise pahuchega... shame same to vote bank politics... In logon ko jail ya detention mein dala ja sakta... Save your self...

They are protesting against a law and the spirit of Constitution, which is unconstitutional... The businesses are not investing due to instability created by such... bandh would destroy business... This is totally unproductive; they would unite HINDUS, too, which is a majority which would vote for the incumbency...

Inflation and Unemployment and Growth and Expectations....

INDIA's population growth rate has gone down from 17% pertenyears to 12% pertenyears... From 1.7 percent to 1.2% peryear or 170 crore peryear to 120 crores peryear... This is one of the major reasons for a slowdown in the growth rate... After accounting for the natural unemployment rate or frictional unemployment of 4-5 percent the potential growth of the INDIAn economy is 7-8% without stoking inflation... 6.1% unemployment is not that bad by the standards depending on the lowdown... and could bounce back with stimuli....

Agriculture economy in INDIA provides employment to 50% of the economy, yearly floods and drought affect demand in the economy also through prices, higher prices of the food items again increase interest rate expectations and lower demand for other industries, too... It is a big constituency, too... Problems in the agriculture must be dealt consciously... Too much supply of labour has depressed in income and demand in the agriculture economy....

PM must allocate funds for irrigation and dams to reduce the chances for floods and droughts the economy faces every year that upset prices or inflation and interest rate and expectations to provide stability and reduce uncertainty...

According to tradingeconomics.com INDIA's GDP would be around 3,42, 000 Crores Rs GDP in India is expected to be 3420.00 USD Billion by the end of this quarter, according to Trading Economics global macro models and analysts expectations. In the long-term, the India GDP is projected to trend around 3420.00 USD Billion in 2020, according to our econometric models. Trading economics dot com... which would be significantly higher than 2019... INDIA's GDP at constant prices is also expected to go up 37200 crore rs which would be higher than the average real GDP growth rate of 7% in 2018... this is world bank and MOSPI data....

The annual real growth rate for the year 2020 would be 18%... according to the base year 2017-18 by chain... the nominal GDP for the year for the year 2018 is 2726 billion USD in 19 would be 2900 billion USD and in 20 would be 3420 billion USD... then real GDP growth rate in 18 is 7%, in 19 13% and in 20 would be 18% according to the chain based index... The means INDIA is growing 5% on average every q and 18% every year...

Next year’s 2020s GDP estimate is at 5%... This is the average of annual growth in the four quarters; the annual growth rate would be 20%...

Almost nobody understands qoq or yoy concept... qoq over the last quarter from a base year, same with yoy... if the economy grew 7% last year, owing to the base year, this year's 5% growth rate means that this year growth rate has increased 13%, on the same base year...

Disinvestment of PSUs has been slow though it (Gov) has set the limit over 3, 00, 000 crores... We have a huge foreign exchange reserves of over 450 billion dollars or 32, 00, 000 crore rs which could help lower cad, especially lower oil prices 'coz of more dollars per rupee...

If it is spent in INDIA that would help lower dollar and increase foreign exchange rate of the rupee and lower oil prices and inflation expectations... which could reinforce expansion... More dollars would flow in due to strong rupee....

Rating agencies and foreign investors keenly watch fiscal deficit target and inflation expectations... Higher Center plus States' deficit in a slowdown is constricting public spending... Though, if public spending is productivity enhancing that would be expansionary, inflation expectations would be contractionary... Spending on education/skills and health could increase productivity of the human capital...

Seasonal and cyclical food inflation has been there since a longtime which is always followed by more supply and lower prices... It is more or less transient...Demand has gone up relative to supply since supply has been delayed... Low borrowing cost or real interest rate since inflation has increased could help increase supply and contain prices... The food deflation in the past which depressed rural demand could get a lift by higher food prices and increase rural income and demand in the economy...

Little inflation and inflation expectations from a low base are good for spending for, both, consumption and investment... If people believe that prices may rise they would buy soon, also because borrowing cost (expectations) could increase and if they believe that prices may fall they would delay spending also because of lower borrowing cost expectations....

We see that expectations reinforce prices and expectations through the borrowing cost expectations which could increase volatility... In INDIA, higher inflation has reduced real interest rates, but increase in nominal rates could increase real rates and reduce supply and further increase prices...

Inflation in INDIA is a supply side problem further worsened by higher demand during higher growth and the economy easily starts overheating... Inflation expectations and investment, bonds and stocks and broader economy, are linked through bond prices and exchange rate, too...

Higher inflation increase bond yields and lower bond price expectations, people sell bonds and increase investment in equities and lower inflation reduce bond yield and increase bond prices, people buy bonds and sell equities... Higher prices increase investment in production, too and vice versa... Little inflation and expectations are good for the economy...

Expectations are self-fulfilling... If you would wish good it will happen and vice versa because all the economy need is rational expectations and higher spending consumption and saving and investment...

Trump and oil producing nations only add to uncertainty for investors... The situation is dramatically linked to oil prices... US shale, too...

Violence and vandalism is akin to terrorism, of the political parties too... Students must become policy makers, after their study, patience is a virtue... abhi to bas jail jayenge...