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Economists devise way to solve India’s growth puzzle

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Hyderabad: In 2015, India switched to a new method for calculating economic growth which transformed the country’s economy to the fastest growing in the world.

Apart from a moderation in the Chinese economic growth, some economists believe that the new series is also responsible for catapulting the economy to the top.

“India’s new GDP series, introduced in 2015 with back-data available since 2012, relies more heavily on nominal indicators in two key areas relative to the old series,” Abhishek Gupta, India economist with Bloomberg Economics in Mumbai, told Bloomberg.

Many economists find the new series puzzling as it is based on nominal indicators. Economists have also found it difficult to predict the growth accurately.

In order to solve the puzzle, a Bloomberg report said Mr Gupta has devised “a new monthly growth tracker for India that compares more closely with the old GDP series. Indicators such as rainfall, auto sales and foreign tourist arrivals, co-relate more with the old series.”

According to the report, the tracker signals the Indian economy’s growth momentum is fading.

“The eight per cent plus growth is puzzling at a time when export growth is weak, farmers say they are in distress and there isn’t data to show enough jobs were created,” the report claimed.

In September, a member of the RBI’s monetary policy committee, Ravindra Dholakia, questioned the accuracy of new GDP growth data.

Writing in a paper published in Economic and Political Weekly (EPW), Mr Dholakia argued that the statistics office is overestimating manufacturing output by replacing the Annual Survey of Industries with corporate financial data in the new series.

A revision of growth numbers in the previous years using the new data series found that economic growth topped 10 per cent under the previous UPA government in 2007.


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Shaktikanta Das assumes charge as RBI Governor

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New Delhi : Former Economic Affairs Secretary Shaktikanta Das Wednesday assumed charge as the RBI Governor.

He replaces Urjit Patel who abruptly resigned amid a face-off with the government over issues related to governance and autonomy of the central bank.

“Assumed charge as Governor, Reserve Bank of India. Thank you each and everyone for your good wishes,” Das said in a tweet.

Finance Minister Arun Jaitley termed Das as a person with “right credentials” for the RBI top job.

“Das has been a very senior and an experienced civil servant. He has almost his entire career in the management of finances and economic management of the country both, when he was in the state government of Tamil Nadu and also when he was in the Government of India in the Ministry of Finance,” Jaitley said.

Das, who becomes 25th governor of the RBI, is a former IAS officer of Tamil Nadu cadre.

Jaitley said his appointment was necessitated by the resignation of Urjit Patel as Governor of the RBI on Monday.

“I think, he (Das) has the right credentials. He has been extremely professional, has worked under various governments and has excelled himself. I am sure, in meeting the challenges before India’s economy as Governor of Reserve Bank, he will certainly act,” the finance minister said.

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ADB retains Indian growth forecast at 7.3% for FY19

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New Delhi: Asian Development Bank said it has retained its India growth forecast at 7.3 percent for current fiscal and 7.6 percent in the following financial year.

India is maintaining growth momentum on rebounding exports and higher industrial and agricultural output, ADB said in its Asian Development Bank Outlook Supplement.

“India saw GDP growth moderate to 7.1 percent in Q2 of FY2018 (ending 31 March 2019) from 8.2 percent in Q1, for 7.6 percent growth in the first half,” ADB said.

The slowdown came mainly from weak food prices, dampening rural consumption, higher oil prices delivering a negative shock in the terms of trade, and rising costs for raw materials.

“Nonetheless, growth forecasts of 7.3 percent for 2018-19 and 7.6 percent for 2019-20 are retained from the update despite some downside risks,” ADB said in the supplement.

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Onida starts manufacturing televisions for Reliance Retail

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Mumbai: Onida (Mirc Electronics Ltd.), the leading consumer durables company in India has started to manufacture televisions for Reliance Retail. With the demand for third-party TV manufacturing driven by the government’s ‘Make in India’ initiative and with the available manufacturing capacity at the factories, the company is bullish on its growth trajectory.

The company has taken strategic decision to start non-captive manufacturing during the current year and had started manufacturing televisions for Reliance Retail from July 2018.

Onida has recently started its LED panel manufacturing plant and the company is currently manufacturing 80 per cent of television LED panels required for the captive purpose to reduce cost and have an edge over other brands.

Upbeat on the developments taking place in the company, Mr. Vijay Mansukhani, MD, said, “We are delighted to work with Reliance Retail. We need not incur any further capex as the current manufacturing facilities can take care of sizable non-captive business. Neither have we needed working capital.”

“Considering the low penetration levels across all consumer durables, there is enough market for existing and new players. The demographics of India supports a good amount of demand and many international players would like to tap the Indian market. Many players are approaching us because of our strengths in R&D, quality, distribution, and strong logistics and after-sales services”

He further added that “Unlike other players, we can support new players across the value chain”.

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