India’s Economic Growth Accelerates | Hacker News Reader

India’s Economic Growth Accelerates

wsj.com

98 pointskungfudoi63 comments

Significant point mentioned midway:

  The country’s growth also got a boost this year when 
  government statisticians changed the way they calculated GDP.

From the linked article:

  The Indian statistics ministry said that after updating the base year 
  used for marking trends in the economy and switching to a 
  market-price calculation of gross domestic product, the economy grew 
  by 6.9% in the year that ended last March. Using the previous 
  methodology, GDP expansion that year was 4.7%. China’s economy grew 
  by 7.4% in the 2014 calendar year.

Just to expand on the two revisions:

Since January 2010, the base year for India’s statisticians had been the 12 months that ended in March 2005. From now on, it will be the year that ended March 2012. The revised calculation also incorporates more- comprehensive data on corporate activity and newer surveys of spending by households and informal businesses.

The government also said Friday that its benchmark measure of economic growth will henceforth be based on market prices, not on factor costs. The latter method, which India had previously preferred, tabulates economic activity based on the costs of production, whereas the other method is based on the amounts paid by consumers. Most countries and international bodies calculate GDP based on market prices.

The base year for any country's GDP calculation is normally recalibrated every 5 years or so to adjust for structural differences in an economy - sustained changes in the prices and of goods and services that are not attributed to inflation, which pegging to the CPI of a base year is intended to mitigate. These structural changes in the economy are due to new technology, changes in the production process, changes in social/cultural norms, etc. Anything that affects supply and demand other than price level. So this isn't a big deal.

The more interesting piece of the puzzle is the decision to move from cost-of-inputs based calculation to an expenditure calculation. This is an accounting problem for any economy that is transitioning from a goods-based economy to a services-based economy. In developing economies, a lot of value is produced outside of the market - eg cooking, cleaning, raising children vs. eating at restaurants, hiring cleaners, hiring nannies, daycare, etc. As more of these non-market goods/services move into the realm of the market, they start to count towards GDP under this new expenditure-based GDP calculation. This can lead to overinflated, overoptimistic growth projections.

At the end of the day, most countries calculate GDP using expenditure-based vs. cost-of-production so it means we will be comparing apples to apples when we talk about GDP in the US vs. the UK vs. India. But the real question is: when will we create a better measure of growth than GDP? One that factors in pollution and emissions at the very least is long overdue.

http://www.forbes.com/sites/timworstall/2015/04/18/indias-ch...

India will have a good run, as long as oil prices remain low. It still have to do reforms which the Central and State governments are not willing to do. Even though Modi is supposed to be the pro-business friendly messiah, the politics and yearly elections at state level put certain binds and limitations. India will have growth, and lot of people will be millionaires but I would be surprised even in 2030 if India surpasses UK or Germany, and makes into TOP 5. The economic policies are not cohesive and politics for a lack of better word are "Tribal".

> I would be surprised even in 2030 if India surpasses UK

I would be surprised it if didn't surpass the UK by then. According to IMF[1], the 2015 GDP of UK and India are 2864 and 2182 Billions USD. All India needs to do is grow about 18% faster than the UK. Assuming UK grows at 3.0% that is 4.8% for India. Hard to see how in the next decade or so of low commodity prices, booming working population, low debt overhang, china slowdown etc., India does worse than that. I would not be surprised if India overtook UK before 2025.

[1] http://www.imf.org/external/pubs/ft/weo/2015/02/weodata/inde...

Are you Indian? The new government has started imposing new levies and commodities are at an all time high. The CoL is getting ridiculously expensive and one could live comfortably in a few western countries at this rate.

Greed and corruption are pulling India further down than portrayed. Farmer suicides are alarmingly high. IT companies are losing lucrative overseas projects as well.

The need of the hour is to be economically mindful and invest in holistic education and hope not to fall into a corrupt/beauracatic trap.

Please quote the sources of data for your claims ... From what I see https://en.wikipedia.org/wiki/Farmers%27_suicides_in_India#/...

>>I would be surprised it if didn't surpass the UK by then.

Define 'Surpass' please.

These are not just economic metrics, one needs holistic development. Infrastructure, energy security, national security, access to good public schools etc.

As Indians we need to accept the fact it will heck lot of more time for us to see any real change on the ground.

Just curious why you type 'china', 'India' and 'UK' when you type country names? I've seen this many many times. As Chinese I don't make such mistakes. And you guys surely have better English than me..

I personally write China PR when government stuff is involved.

It all boils down to whether they get the Kohinoor back.

Now that China's commodity supercycle has ended, and commodity prices remain soft, this is a good time for India to focus on infrastructure. They haven't produced the Alibabas or Weibos but they have an amazingly solid IT work force and we've seen more and more VC in India. This could be the start of a real break out for India.

India has been for some years consistently making the news on great and diverse systematic corruption fighting actions.

Good to my theory that corruption is the main reason why (democratic) countries don't develop. As far as I know, I have only Italy as example of country that fought corruption and didn't grow after it.

Italy was already a developed nation and birth rates have been falling for some time.

this is great but at the same time terrifying. India thus far has committed to power its growth using coal-fired plants. We in the west have definitely committed our sins in this regard, however India is particularly vulnerable to the changes caused by global warming

India's CO2 emissions are pittance compared to US, China and especially if you take the population into account. India has such a coal shortage they are making a pivot faster than many people think to Solar and Nuclear. The last regime messed up the Nuclear part because Fukushima happened and there was this leftist surge of pinning the blame on suppliers etc. If they fix the liability laws in Nuclear, in next couple of decades, India will move the NG, Solar and Nuclear at a satisfactory pace.

> India's CO2 emissions are pittance compared to US, China and especially if you take the population into account.

Exactly.

India's carbon emissions per capita are the lowest of all the countries listed here[0]; the US emits almost ten times as much per capita. That's literally 2.3 times as much by volume, even though India has 1.2 billion people. (And the US isn't even the top of the list - Australia is!)

For comparison, the EU emits four times as much carbon per-capita as India, which amounts to 1.5 times as much by volume (despite the EU's small population of only 500,000,000).

China is often used as a bogeyman when it comes to the environment, but honestly, even China's emits half as much carbon per-capita as the US does, and only a hair more than the EU does. They just have four times as many people as the US.

[0] https://en.wikipedia.org/wiki/List_of_countries_by_carbon_di...

Even when India achieves a level of development comparable to the US, Europe, and increasingly China, it will likely still have a lower household CO2 footprint, just because it is a much warmer place, with higher population density.

The farther north you are and as long as the primary fuel is carbon-based (NG, Electricity from NG or Coal), you'll need more of it to survive.

Transportation CO2 in India will likely grow, as it is a function of travel frequency and distances for people/goods, and it takes basically the same amount of energy per mile everywhere.

What's really striking to me is that the US per capita CO2 emission probably isn't twice as high as China because of our high industrial output, but rather because of our widespread use of carbon-intensive heating and propulsion tech coupled with huge houses and vehicles, and low density cities.

All of these CO2 emissions can be turned around by really disruptive low/zero CO2 energy generation, both variable renewables and stable baseline to replace coal. For that we either need mass cheap energy storage, or invest seriously in safe (non-fissile?) nuclear energy, preferably both.

And then Indians will spend that on cooling instead.

Heating a house from 30F to 70F uses far more energy than cooling a house from 100F to 70F: http://www.citylab.com/housing/2013/03/cities-dependent-air-...

The question is where does the electricity for cooling come from. If it's mostly coal-powered electricity, that's pretty bad, considering the low efficiency and high CO2 output of coal burning electricity generation. Obviously that needs to change.

Hopefully they start using more nuclear and renewables as the cost of those drops. For one thing, India has incredible solar resources (http://mnre.gov.in/sec/DNI_Annual.jpg, http://www.dlr.de/tt/Portaldata/41/Resources/dokumente/insti...), being as close to the equator as it is, and it also has large populations living in areas with high irradiation, in comparison to Europe or even China.

Once the price of solar drops further (it's within reach of the middle-class in US and Western-Europe), they will have even more reason to adopt it.

I remember that during the previous regime India imported a significant portion of the coal consumed despite having one of the largest deposits of coal in the world. The coal mines are probably one of the biggest corrupt sectors in India but a great deal of changes have taken place recently which has given a fillip to local production.

A lot of Indian thermal power plants ran severely under capacity a few years back and that is changing now. India needs a rapid scale up of energy capacity and needs all the Coal, Solar and Nuclear energy it can get. I am really bullish on the first two (Coal for about a decade or so, can taper off later). I really hope our Nuclear capacity expands fast as well, it is the only environmentally friendly option we have for our size.

> India has such a coal shortage they are making a pivot faster than many people think to Solar and Nuclear.

I'm sorry but those claims are so far out of phase with reality I have to respond. India's response to coal supply problems is to grow coal mining at double digit rates. India is opening a new coal mine every month with the goal of doubling already large coal production in the next five years.

http://instituteforenergyresearch.org/analysis/india-opening...

This means that by the time the next US president tries to get reelected India will be producing more coal than the US.

India is definitely not "pivoting" to renewables. If there is a "pivot" it is toward domestic coal over foreign coal. The amount of new coal generation capacity under construction now is almost five times the approved (as opposed to under construction) nuclear and renewable capacity combined. Details here:

http://www.industry.gov.au/Office-of-the-Chief-Economist/Pub...

And some large fraction of the approved renewable capacity is window dressing so renewable proponents and climate negotiators can make the claims you offered here. It won't be built. Ten years from now India will have doubled it coal generation and that same token amount of 'approved' renewable capacity will still be on the books.

India is all about coal and India knows it. India just told Obama and the rest of the climate elites in Paris to sod off with their "carbon imperialism." India has no intention of ruining its growth on behalf of Western anxieties.

Right or wrong, that's reality.

We've had almost 5 decades to make renewable energy cheaper than coal. We've been trying since the energy crisis of the 1970s.

Nuclear, solar, wind, etc. It seems unfair that a billion people remain uneducated and in poverty because a small percentage of the world's population refused to make the necessary changes. Before there was Al Gore, there was Carl Sagan:

http://youtu.be/G_3pZXhKVWY

totally! however US and Canada are big w/ relatively small populations. People can move around, they can adjust. India doesn't have the same luxury

I think it could be argued that some global warming could be a net benefit for Canada. As long as it stays below the level that would cause global catastrophe. Sea level rise will cause some issues, but Canada really has very few large cities on the coast and there are (expensive) ways of dealing with that, just like all other coastal cities will need to do in the coming century. But on the other side of the equation it would extend growing seasons and increase the amount of arable and forested land in the vast interior of the country. Changes in rainfall will be a mixed bag, bringing adjustment, but likely not ruin. Maybe this is a very simplistic way of looking at it, but as a Canadian I've always selfishly looked at global warming and said "bring it on". Of course global warming could reach a point where it causes serious catastrophe on a global scale, e.g. releasing methane deposits on the sea floor and going into a feedback loop. That's a losing scenario for the entire planet, and there's no guarantees yet that we will avoid that fate.

Global warming just means there's more energy in the atmosphere. Hotter summers, colder winters, more powerful storms, ...

Where do you get colder winters from? I don't see that as a likely outcome. Yeah the Earth's climate is a complex system, and global warming produces complex and sometimes unexpected effects. But you can't say colder winters just "because complexity". The likely effect, unsurprisingly, is warmer, shorter winters.

I am not educated in this field, but anecdotally, I believe it comes from the more energetic movement of the atmosphere drawing coldfronts down from the polar regions more frequently.

I also prefer to use the phrase 'Global Weather Chaos' rather than 'Global Warming'. Much like I also prefer the term 'Waste Reducing Reactor' to 'Breeder'.

I don't think weather chaos is that bad. Us humans are adverse to change, but that change will be both good and bad. Between that and the sea level rising it will cause a lot of resettlement and moving around, but hardly the end of the world in itself.

Almost 40% of the US population lives near a coast.

http://stateofthecoast.noaa.gov/population/welcome.html

What's your guess to what part of the economy that represents? I don't think you thought this through. Katrina cost over $100 billion. The damage to the economy will be in the trillions. Put your million dollar CT home, put it on a truck to Montana, where it's worth 75% less?

How much of Katrina's cost was due to their wildly incompetent government failing to allocate even a modest amount of infrastructure spending to upkeep the walls that should have held back that flooding (which caused most of the damage)? Obvious answer: the majority of it.

The US hasn't been hit by a major hurricane in a decade at this point.

Sandy. $75 billion in 2012.

https://en.wikipedia.org/wiki/Hurricane_Sandy

Are you an American? I've gotta know how you could possibly be that wrong. I guess by the time it hit the north east it was only a big storm? $75 billion is the second costliest "hurricane".

>>We in the west have definitely committed our sins in this regard

And reaped great rewards for it. You've eradicated hunger, poverty, built great infrastructure, and turned yourselves into first world economies.

Now asking others to keep starving while you enjoy fried chicken is a little hypocritical.

I do not know about India as a whole making strides in economic growth. It has to do something with the overall education level. I am taking the example of Kerala , a small coastal state in the southern part of India. This small state in India has made great strides in economy as well as high living standards. I think this has to do with the high literacy rate in the state due to various socioeconomic & political reasons. This model of development is called Kerala model.

An excerpt from the Wikipedia article , https://en.wikipedia.org/wiki/Kerala_model

" Kerala, a state in India, is a bizarre anomaly among developing nations, a place that offers real hope for the future of the Third World. Though not much larger than Maryland, Kerala has a population as big as California's and a per capita annual income of less than $300. But its infant mortality rate is very low, its literacy rate among the highest on Earth, and its birthrate below America's and falling faster. Kerala's residents live nearly as long as Americans or Europeans. Though mostly a land of paddy-covered plains, statistically Kerala stands out as the Mount Everest of social development; there's truly no place like it. "

Some of the recent news in which Kerala stands out from all other states in India.

1. The Cochin International Airport in Kerala is the world's first fully solar powered airport.

http://time.com/4002630/solar-power-india-airport-flight-gre...

2. Did I mention that Kerala too has 1Gbps connectivity, currently given for startup incubators in IT parks, soon the entire state will have it.

http://www.newindianexpress.com/cities/kochi/Kerala-All-Set-...

3."As Kerala gets ready to be declared India’s first ‘Digital State’ on August 15, a host of vital data shows that the state is well ahead of other states in e-matters."

http://www.newindianexpress.com/states/kerala/Data-Shows-Ker...

Wikipedia article about Kerala State https://en.wikipedia.org/wiki/Kerala

PS: I am from Kerala state & I enjoy almost the same living standards in Kerala as that of US where I am currently working.

Take the Kerala story with a pinch of salt. Kerala model is loved by the Indian left and is seen as competing model for right's Gujarat model. The state was ruled by communists for long time but almost all parties focused on redistribution of wealth including forcibly taking away people's land and giving it away to others. Over years economists like Amartya Sen have spoken about the model using it to demand that Indian government focus on redistribution.

There are pretty good counter arguments against Kerala Model too as outlined by Prof. Bhagvati in his book "Why growth matters".

Kerala in 18th century was ruled by a king named Marthanda Varma who focused on trade. Unlike other states his lowered taxes, invested extensively in building trade routes, waterways etc. Through some clever ideas he also made his kingdom war-proof. This was the period during which Kerala bloomed economically. By the time British colonized India Kerala was already far superior in health,economy and education compared to other states which are ravaged by war, British plunder etc. (British could not plunder Travancore Kingdom in Kerala as much as they would have liked compared to say Kolkata which was another trade port.)

Since 1947 to 2016 Kerala's progress on most parameters is pretty slow despite huge government spending. Kerala spends 7 times more on public health per capita than Punjab to get results only marginally better than Punjab. Despite having the highest per capita government spending on health, Kerala has even higher private expenditure on health than most other states to get results only marginally better than other states.

Despite the focus on redistribution Kerala has highest income inequality in the country.

Kerala was third poorest state in India when Communists came into rule in 1953. I will commend the communists for improving the socio-economic indices, not sure but perhaps the only state with 100% literacy in India, which they have done in 90s. But because of the LDF coalition, many businesses have stayed out of the state, on the economic front Kerala has ways to go.

Totally agree. Kerala is probably the most anti-industrial/anti-capitalist state in India. A majority of the working population earn their livelihood abroad (mostly Middle East), sends money and keeps the local economy running.

Being Anti-industrial/Anti-capitalist is a bad thing ? That is news for me.

It is if there aren't enough jobs to support the local population and there are only few jobs Government can create. To the people who are not familiar with political atmosphere in Kerala, it's not the 99%/Feel-the-Bern kind of socialism you see in US, but "how dare you start something which will make you rich and also create jobs" kind of communism. For god's sake, it is probably the only place in the world where common people use terms like "bourgeoisie".

> British could not plunder Travancore Kingdom in Kerala as much as they would have liked compared to say Kolkata which was another trade port

Incidentally, Kolkata is not just a Communist hotspot, but has had the longest-serving democratic Communist government in the world. That has not worked out so well for Kolkata and West Bengal, sadly.

Just pointing that out as a counterexample in another Marxist regime.

>> I am from Kerala state & I enjoy almost the same living standards in Kerala as that of US where I am currently working.

You've got to be kidding me. The definition of first world country isn't a fast internet connection. Heck US has 2G speeds all over the country.

Having world class road/transportation infrastructure, dependable energy security, national security, economic infrastructure, public schools which provide same quality of education throughout country etc. These are some of the things that count as metrics for development.

Kerala or any state in India is atleast 5 decades away from the standard of living I've seen in the US.

Well to be fair, under the Wikipedia article GP posted, it clearly says

Human Development Index: [1]

"From the starting of this index, Kerala has scored high, comparable to developed countries." ..<.. "The statistic is composed from data on Life Expectancy, Education and per-capita GDP (as an indicator of Standard of living)"

As far as internet, they are planning on introducing statewide free wifi both in rural and urban sectors. [2][3.1] [3.2] (technical) [3.3] (technical)

Now if you want to pick as to how they deal with modern issues, this could be an example. (Kerala becomes first state to unveil transgender policy) [4]

So yes while I agree it still has to catchup on some grounds, I don't think its decades away from achieving the standard of living found in the US.

[1] https://en.wikipedia.org/wiki/Kerala_model#Human_Development...

[2] http://kerala.me/blog/kerala-cities-to-become-wi-fi-enabled-...

[3.1] https://en.wikipedia.org/wiki/Akshaya_project

[3.2] http://www.networkmagazineindia.com/200403/casestudy02.shtml

[3.3] http://tier.cs.berkeley.edu/docs/retreat_oct_05/mubaraq-econ...

[4] http://indianexpress.com/article/india/india-news-india/kera...

Sorry, to see effects of Kerala model you don't even have to go that far.

Keralites can't wait to leave kerala for greaner pastures. Its no heaven. In fact going by the number of Keralites seeking jobs outside their state to merely make a living, Kerala is anything but developed.

I expected this comment. Happy to see it. Though this comment isn't worth anything per say, this shows how the rest of India is ignorant or cannot accept the facts that this state is a shining example of how other Indian states should be. All I can relate this comment is to the below fable.

"Driven by hunger, a fox tried to reach some grapes hanging high on the vine but was unable to, although he leaped with all his strength. As he went away, the fox remarked 'Oh, you aren't even ripe yet! I don't need any sour grapes.'

People who speak disparagingly of things that they cannot attain would do well to apply this story to themselves."

https://en.wikipedia.org/wiki/The_Fox_and_the_Grapes#The_fab...

I get it, I should have seen this coming.

Either way, its near impossible for any Indian to accept anything negative told about their state, regardless of how shitty the actual conditions are.

Either way, very happy to know that Kerala == U.S.A

All the best.

Have you lived in both places ? I have. Hence.

Yes, have lived. Hence.

Do you speak malayalam , can you read/write malayalam ?

this is a claim according to the Indian government. Not necessarily true. A related year old article on Quora: https://www.quora.com/Why-is-Indias-GDP-growth-rate-of-7-0-f...

Do you have a good source for this, or should be take every anonymous Quora answer with literally zero references as the authoritative source on a topic as complex as the economy?

The comment is obviously flawed since it's trying to equate the GDP to industrial production. In the US, for instance, the annualized industrial production has been -1.8% [1] but the GDP growth has been +3.4% annualized [2]. This is a difference of 4.2 percentage points, similar to India's per the comment. Also, India's export growth is around 1% - not exceptional, but definitely not -10% as stated in the Quora comment [3].

[1] http://www.wolframalpha.com/input/?i=us+industrial+productio...

[2] http://www.wolframalpha.com/input/?i=us+gdp+growth

[3] http://www.wolframalpha.com/input/?i=india+export+growth

http://blogs.reuters.com/breakingviews/2015/06/05/india-gdp-...

http://money.cnn.com/2015/02/09/news/economy/india-gdp-growt...

I agree. It is also worth noting that what goes into GDP in terms of trade is net exports, i.e. exports - imports. Lower commodity prices have given a huge boost to that GDP component as India is a net consumer of commodities.

That said, I don't know how accurate India's official figures are. But I doubt that they are less reliable than the Chinese ones.

That is because the government changed the formula for GDP calculation. Perhaps its a kind of growth hack.

Current Indian government has started playing with numbers, it can backfire. Below article mentions some not-so good numbers.

http://www.firstpost.com/business/11-reasons-why-india-growi...

I don't know if the govt. is massaging numbers, but the very first 'problem with GDP' in the list makes no sense. GDP is calculated on net exports (exports - imports). So to evaluate the increase or decrease in GDP you need to know what happened on the imports side. India is massive energy and commodity importer, and energy has more than halved in price over last year. Without knowing how much the imports have fallen how can you assert its impact on GDP. Given india imports commodities and exports finished products it would not be surprising if the actual GDP rose (net exports).

The accelerated growth might be a result of lower oil prices than anything else. It will be interesting to see how the current government goes ahead with the necessary reforms to ensure that the growth is sustainable.

Please stop posting paywall'd articles

>Are paywalls ok?

>It's ok to post stories from sites with paywalls that have workarounds.

>In comments, it's ok to ask how to read an article and to help other users do so. But please don't post complaints about paywalls. Those are off topic.

https://news.ycombinator.com/newsfaq.html

Step 1 - search for the article on Google - https://www.google.com/search?q=India’s+Economic+Growth+Acce...

Step 2 - Click.

Optionally click on "Web"

  9 points by kungfudoi 1 hour ago | flag | past | WEB | 2 comments

Or better: Click on the 'web' link next to comments.

https://h4labs.wordpress.com/2015/09/14/hacker-news-faq-1-ho...

access it via incognito. agree btw

Reply on news.ycombinator.com