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...
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