New GDP series faces fresh questions after NSSO discovers holes

[Nilgiri]

where most of the major parameters are down

energy? market cap? investment? input volumes? forex? liquidity?

Point them out to me.

 

[Qutb-ud-din Aybak]

Live mint is anti national.. supported by Congress. Nehru is the editor.

Dead Nehru?

 

[Zee-shaun]

Seven charts show how the Indian economy has come a full circle under Modi
By Nupur Anand
March 11, 2019
https://finance.yahoo.com/amphtml/n...Aa1g2rtsRMdUVWtjx-P5hiuEdg7TPmTTI6XF1vwS6XNJI

energy? market cap? investment? input volumes? forex? liquidity?

Point them out to me.

I started following the news when the governor of the central bank refuted Modi's first report on the revised GDP. Five years later IMF came to the same concusion.
I will try to find the report showing the major parameters so please bear with me Sir.

 

[313ghazi]

Lol 38% of data used might be wrong, but gdp is unaffected.

 

[phancong]

Lol 38% of data used might be wrong, but gdp is unaffected.

38% of the data generate from the none existence company to add up the GDP growth rate.

 

[Khanivore]

Live mint is anti national.. supported by Congress. Nehru is the editor.

So where's your lynch mob, are they slacking or too busy lynching Muslims for selling cows? Yeah, I guess it's the latter.

 

[Nilgiri]

Seven charts show how the Indian economy has come a full circle under Modi
By Nupur Anand
March 11, 2019
https://finance.yahoo.com/amphtml/n...Aa1g2rtsRMdUVWtjx-P5hiuEdg7TPmTTI6XF1vwS6XNJI


I started following the news when the governor of the central bank refuted Modi's first report on the revised GDP. Five years later IMF came to the same concusion.
I will try to find the report showing the major parameters so please bear with me Sir.

Nupur Anand? Quartz? lol. Cherry pick + extrapolate! Other side can do it too.

Yes please pull up the IMF "conclusion".

If its the gopinath lady's "concerns"...dont bother though.

Lol 38% of data used might be wrong, but gdp is unaffected.

Can't watch a simple video for the facts lol.

38% of the data generate from the none existence company to add up the GDP growth rate.

Wrong lol. Again a total illiterate. Do you even know the main reason why the shell companies exist? Pro tip: watch the video posted first before you reply.

 

[Zee-shaun]

Nupur Anand? Quartz? lol. Cherry pick + extrapolate! Other side can do it too.

Yes please pull up the IMF "conclusion".

If its the gopinath lady's "concerns"...dont bother though.

Sir, with all respect please don't make lame excuses by killing the messenger or demonise him or his credibility because he writing for a low rated site. You know your stuff and I have a lot of respect for you but I will never target you or your credibility because you don't write for IMF or Goldman Sachs. So refute this guys claims if you don't agree but spare him.

 

[Khanivore]

Financial Times of UK is reporting it too.

Excerpt: "Since the database’s introduction under Mr Modi in 2015, it has been used to underpin upward revisions of growth figures. At the same time, growth estimates under the previous Congress-led administration have been downgraded. The revelations come amid mounting suspicion among independent economists and civil society figures of the politicisation of India’s statistics agencies, which have historically been seen as credible and non-partisan. Analysts have argued that the changes made in 2015 are at the root of India’s increasingly unreliable official statistics."

Reuters also reporting it.

Excerpt: "Economists and investors are increasingly showing that they have little or no confidence in India’s official economic data."

"Last December, the government held back the release of jobs data but an official report leaked to an Indian newspaper showed the unemployment rate had touched its highest level in 45 years."

"Many economists said they were stunned when the government upwardly revised GDP growth for 2016/17 to 8.2 percent from 6.7 percent, although the demonetization of high value notes hit businesses and jobs in that financial year."

"Some investors have been burned by believing in India’s high growth story."

"Private power producers invested billions of dollars based on expectations of electricity demand that didn’t pan out in the rural economy. With economic growth pegged at over 8 percent a year, they had expected a pick up in demand by small businesses and household."

"Many of the power producers are now facing bankruptcy and legal disputes as many of the new plants they built are working at about 60 percent of capacity."

"In the real estate sector, developers said, it could take 3-4 years to clear about 500,000 unsold flats in and around New Delhi that were built on the assumption of higher income jobs in urban areas."

CONCLUSION: Modi/BJP has been faking, manipulating and cherry picking data to paint a false picture of the economy. It's not just the Congress that's complaining. It even goes up to IMF who are calling for 'transparency' on GDP data.

 

[phancong]

Financial Times of UK is reporting it too.

Excerpt: "Since the database’s introduction under Mr Modi in 2015, it has been used to underpin upward revisions of growth figures. At the same time, growth estimates under the previous Congress-led administration have been downgraded. The revelations come amid mounting suspicion among independent economists and civil society figures of the politicisation of India’s statistics agencies, which have historically been seen as credible and non-partisan. Analysts have argued that the changes made in 2015 are at the root of India’s increasingly unreliable official statistics."

Reuters also reporting it.

Excerpt: "Economists and investors are increasingly showing that they have little or no confidence in India’s official economic data."

"Last December, the government held back the release of jobs data but an official report leaked to an Indian newspaper showed the unemployment rate had touched its highest level in 45 years."

"Many economists said they were stunned when the government upwardly revised GDP growth for 2016/17 to 8.2 percent from 6.7 percent, although the demonetization of high value notes hit businesses and jobs in that financial year."

"Some investors have been burned by believing in India’s high growth story."

"Private power producers invested billions of dollars based on expectations of electricity demand that didn’t pan out in the rural economy. With economic growth pegged at over 8 percent a year, they had expected a pick up in demand by small businesses and household."

"Many of the power producers are now facing bankruptcy and legal disputes as many of the new plants they built are working at about 60 percent of capacity."

"In the real estate sector, developers said, it could take 3-4 years to clear about 500,000 unsold flats in and around New Delhi that were built on the assumption of higher income jobs in urban areas."

CONCLUSION: Modi/BJP has been faking, manipulating and cherry picking data to paint a false picture of the economy. It's not just the Congress that's complaining. It even goes up to IMF who are calling for 'transparency' on GDP data.

IMF alarmed by India fake data because they lost billions invested in India by believe in the fake highest grown economy in Asia.

We all know the demonization cause India economy in the downswing.

 

[Nilgiri]

Sir, with all respect please don't make lame excuses by killing the messenger or demonise him or his credibility because he writing for a low rated site. You know your stuff and I have a lot of respect for you but I will never target you or your credibility because you don't write for IMF or Goldman Sachs. So refute this guys claims if you don't agree but spare him.

Journalists are all the same bunch to me, whether they bray support or antagonism at something.

Heck I see some journalists now breathing hip hip hurray on Trump economy for US regarding unemployment figures being the lowest they have ever been etc.

But those same journalists were also the same ones saying under Obama, the same employment figures improving were not good because they copy paste another analysis showing that job increase comes from people having to take on more jobs (2 - 3 jobs to replace 1 steady good one they lost) to pay for obamacare etc.

Suddenly that all goes out the window etc...rather than concrete analysis on whats going well and what isnt and need to be improved. It would also be ridiculous to say trump/republicans conspired to change something in the employment data just to make it look good...in the end countries submit to standards and high frequence data output and earn credibility on that...or they dont (and then you have to judge their credibility somewhat yourself).

Same thing with Modi, the much repeated claim that he "cooked" up the new GDP members is stupid if you actually look at the SNA program that IMF suggested to the UPA regime under manmohan singh. The system was on its own timeline independent of politics (if UPA came to power in 2014, it would have done exact same thing as result because thats the point of having apolitical institutions).

India no different, I got no real use or interest in what journalists (and whomever control their puppet strings) have to say tbh regarding economics.

To me its gotta come from the source of something reputable and 3rd party...or an actual economist (who has researched the data).

That is maybe just 1% of the output put out in news though, 99% is some noise on someones agenda.

To me, underlying consumption data is stuff like energy consumption:

https://data.worldbank.org/indicator/EG.USE.PCAP.KG.OE?locations=IN

since its major multi-input into every sector of the economy (reported/unreported...solid/shaky data stream whatever).

In the years to come (since it goes up to 2014 only in that graph) if that takes some stagnation or decrease, then there is actual backing toward economic slowdown. Otherwise one can more or less correlate what the pace is now compared to India in 1990 - 2000 and 2000 -2010 etc.

I mean there is also broader stuff one can 3rd party observe too, to correlate:

https://www.cnn.com/2017/04/13/asia/india-nasa-satellite-night-trnd/index.html

India is a SDDS standard country, so of course it will get more scrutiny naturally on whatever derived number, that is a good thing. Other countries in region and developing world broadly also must aspire to get to SDDS standard and earn investment grade credit rating etc....to compete on this analysis on equal footing.

Not to mention GDP growth itself is complex number. Lot of economist say that China is now growing at 4% only...but to me its just a number. I mean one year I remember India grew by 30% in GDP (nominal USD).....but huge deal of it is asset inflation that year. Sometimes 4% one year can mean lot more than 8% another year.

If things were really not going well, I doubt RBI would be doing dollar buy backs like this and that too have it over-subscribed:

https://www.livemint.com/industry/b...e-swap-auction-on-23-april-1554123193938.html

I mean there is big demand pull for INR in India domestically showing much improved economy compared to what the state it was in inherited in 2014...and actual demand to exchange even USD for it within India at this level (never been seen before tbh). Means only one thing, good credit growth is back...and investment cycle is on the uptick again.

 

[Kai Liu]

People's general experience about india is worse than sub-Sahara Africa;
india's fake GDP is a open secret, india can't even compare to China 2 decades ago...
Shanghai in 2002:

Comparing to today's China, india is a joke:
City:

https://defence.pk/pdf/threads/chinese-city-pictures.615749/

Countryside:
Ordinary Chinese countryside view:

https://defence.pk/pdf/threads/afte...ill-call-chinese-farmers-cheap-labors.564550/

Infrastructure:

https://defence.pk/pdf/threads/china-hsr-news-and-information-original-translation.363685/page-229

People's wealth
cars parked in an ordinary neighborhood:

https://defence.pk/pdf/threads/cars-on-chinas-roads.562160/

 

[Dubious]

Don't bother....real conversation is happening in places that matter:

The illiterates here don't know the first thing about what all of this even is....judging from the title itself.

I mean going from 38% companies in MCA matrix could be shell companies --> 38% of GDP calculated wrong

The point anyway is to keep adding bulk in all indisputable 3rd party aggregates, while BD is busy adding inflation (so much so that its real household income declines) and Pakistan is busy with IMF bailout as its forex dwindles to 4th world levels. Just look at both their market caps for instance hah.

BTW @waz @Dubious title has been changed (and has been falsified on top) from original article title (forum rule I believe)

What is the real title? That is the title in the url I believe...but since I am kn mobile and not gonna open that url can you tell me what is the real title? I will fix it when on laptop if I get the chance otherwise some other mod may help you

 

[Nilgiri]

What is the real title? That is the title in the url I believe...but since I am kn mobile and not gonna open that url can you tell me what is the real title? I will fix it when on laptop if I get the chance otherwise some other mod may help you

Thanks dear, it got fixed by another mod or OP already...before you showed.

 

[Nilgiri]

https://www.mynation.com/elections/...9-is-set-to-break-voter-turnout-record-pr4mpx

India’s politicised intellectuals claim to be independent but always latch on to even the slightest news which is useful, according to them, to deride the Narendra Modi government. It doesn’t matter to them that such mindless criticism affects their own image and attempts to hamper India’s credibility at global stage. One such recent example is the way these intellectuals and economists have tried to see the National Sample Survey Organisation Report titled ‘Technical Report on Service Sector Enterprises in India’.

In this report, NSSO stated that nearly 38% of the companies which were surveyed for GDP data using the ministry of corporate affairs 21 database were unusable for data collection purposes. The report further bifurcated this 38% companies into various categories which were “out-of-coverage companies” at 21%, 12% were untraceable and 4.5% companies were closed.

All these intellectuals needed just this single line to cast aspersions on the entire GDP data itself. These highly politicised lot started saying that the entire integrity of the GDP data is questionable now.

It’s much ado about nothing as 38% companies were wrongly classified under service sector but their output had been already calculated for GDP purposes.

What is MCA-21 database?
MCA-21 is the online portal where private, public, one-person and limited liability partnership firms upload their data. I am a practising company secretary and I have been using this portal since its launch and have seen it evolve. Firms are supposed to upload their annual returns/reports balance sheets and profit and loss account (other documents as well but for GDP these are important) onto this portal. As the entire filing is done online and statements are duly audited by a chartered accountant, this database provides for an authentic source of primary data which is definitely useful for any economist.

Further, the companies during incorporation have to provide the NIC industry code for their respective activities which helps the government to see turnover/capital/profit and other details based on industry/sector, at the click of a button. After the Income Tax database, the MCA-21 is one of the most robust and reliable sets. There is no doubt that this decision to take information from here is a superb move.

Problems with MCA 21 database
During and after demonetisation, probably with a larger goal in mind, the government started issuing show cause notices to firms/companies which were not filing the mandatory returns and asked them to either comply or explain the reasons thereof. Whichever companies failed to do so were treated as what we now call “shell companies” and were removed from the MCA-21 database.

Effectively these companies were “deregistered” and their bank accounts were frozen. So, to explain in simpler words: those that did not comply with the law were treated as “shell companies” and “removed” from the database. This was move number 1 to clean the database of fake entries. Approximately 3 lakh companies were deleted. It is possible that many entities which were doing genuine business but were non-compliant in law also got deleted hence such genuine companies were given a window to approach National Company Law Tribunal, show that they aren’t shell companies, that they have genuine business and get their names restored in the database. Obviously a fake company will never do this. A genuine company would comply and the database would capture their numbers in GDP output. Hence objective no. 1 was successfully achieved.

The second issue was to make the database even more reliable. For example, a “shell company” is operating in the field of issuing fake tax invoices for money laundering. In common parlance, such companies are called khokha companies or dabba companies. They say there is honour among thieves so these companies would get their books audited and comply with all requirements under the Companies Act. So, in “action 1” explained above, these entities might not have been issued any show cause notice because they are “compliant”. But speaking in economics terms, are these firms adding to any output in the GDP?

The answer is no. Hence the database needed more cleaning. The ministry then framed rules for “Director KYC” and “Form Activ” compliance. Under these the entity directors were supposed to confirm their address, phone numbers and email IDs via a simple form to ensure they are real people with genuine IDs and addresses. Lakhs of people couldn’t comply with the same hence their Director Identification numbers were deactivated.

Secondly the ministry framed rules to make it compulsory for the firms to provide latitude and longitude data of their registered addresses along with photograph from outside and inside of the premises. The last date to comply is June 15, 2019. The aim of this exercise is to track shell companies which might be filing documents regularly but might not be having any office or premises but were just paper companies or maybe many companies registered in single premises which is the usual modus operandi.

Where exactly is the NSSO ‘problem’
Any company which has not complied with the above is termed a non-traceable, out-of-coverage companies. A combination of above two methods along with field visits, merging GST and Income Tax database gives us a database which is reliable, consistent and elaborate. We are right now going through that phases and hence the NSSO report called the 38% companies as unusable data. Does it mean that the output numbers are wrong?
Obviously not. The NSSO data was specifically regarding the service sector. “Out of coverage” entities were 21% which means that they weren’t working in the service sector but while filing the MCA documents they had wrongly claimed to be service companies. Assuming that these companies are into manufacturing, does it make their output data irrelevant?

Obviously not. It was irrelevant or out of coverage for this particular NSSO study. The way forward is to ask these companies to correctly classify themselves as per the relevant NIC Industry code. Does it make the entire GDP numbers wrong by 38%? There is no bigger joke than this. Ministry of statistics planning and implementation said the exercise was meant to understand the data gaps and take remedial steps while undertaking the new base revision exercise for the proposed 2017-18 series. Fake intellectuals are attacking the government for finding the faults in the data.

Fake intellectuals
Have you ever seen an economist who hates quality data? Well we have many in India. Have you ever seen an intellectual who hates making databases robust, let me know I will show you many. Can you imagine that some academicians hate it when the Index Bases and its constituents are revised to reflect the current reality. These fake intellectuals are anti-logic and highly politicised. Show me one commentator who told you the entire picture as stated above. Have we seen anyone who is commenting on the entire process ? Let me bet, half of them don’t even know about these things or what efforts are being take. It is shocking to see people commenting on matters without an iota of understanding or knowledge.

Whenever data is in favour of the BJP, the Opposition and its friends in the media and intelligentsia start questioning the basis of the data itself. Starting from jobs to education to GDP numbers, the same modus operandi is applied. It does not matter to them that they are cynically undermining the sanctity of institutions on the pretext of saving these.