ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Misguided Priorities

A close examination of the recent trends in government finances suggests that the expenditure pattern of the government does not provide any assurance for the future in terms of building adequate social capital. The regressive nature of taxation policy in recent years along with reduced government spending has put additional burden on out-of-pocket expenditure of individuals.

Comparing IIP and NAS in Their New Incarnations

The Index of Industrial Production series, the most significant macroeconomic lead indicator, was revised by the Central Statistics Office in May 2017, two years and three months after revising the National Accounts Statistics series. Even as the newIIP series is more current, growth rates of output do not match those of theNAS. This, along with the significant lag in the periodic revision ofIIP, diminishes its usefulness.

Measuring Manufacturing

Bringing attention back to the manufacturing sector and to the statistics available to understand it, this analysis presents the differences in size and rates of growth of the sector when measured using the new National Accounts Statistics series (2011–12) and the Annual Survey of Industries. Clearly, changes in methods of measuring (for instance, the shift from the establishment approach to the enterprise approach) have introduced unexplained changes into measures of the manufacturing sector.

What Is Driving Rural Inflation at a Higher Rate?

Consumer price inflation in rural areas has been persisting at a higher rate than that in urban areas and the gap between the two has stood at 1.5 percentage points in May 2016. Inflation of both series slowed considerably during the last two years or so, the moderation in rural areas has been slower than in urban areas. This was partly due to compositional differences accompanied by divergent price movements and partly due to higher marketing costs and trade margins resulting from the prevailing rural–urban divide in terms of infrastructure bottlenecks, inadequate logistics support, etc.

Estimates of High GDP Growth for 2015-16

In producing the new series, the Central Statistics Office with its rebased National Accounts Statistics has done a studious job of marshalling diverse sources of data and weaving them together into a composite new source. However, the final picture of NAS data would have been more acceptable if better caution was exercised in using new concepts as well as new sources of data, and in weighing the growth results against frequent and extensive revisions. The CSO has failed to refine the growth results juxtaposed against the repetitive and substantial revisions that the data sources have impelled and have completely ignored the analytical construct of gross domestic product at factor cost.

Underutilised Fiscal Space

The hike in tax devolution to states by the Fourteenth Finance Commission to give a larger fiscal space to the states has meant sharp cuts for centrally-sponsored schemes. Studying the case of Maharashtra, it is found that without adequate norms and yardsticks of development expenditure, the state has failed to exploit its fiscal potentials.

Inflation with Disinflation?

Price inflation in India as measured by the Wholesale Price Index and the Consumer Price Index has shown diverging trends. While WPI indicates a disinfl ationary situation for 16 months, CPI indicates inflation. Explaining the construction of the two indices, the trends of subgroups of both indices are presented. It is found that the different sample sizes and weightages of commodity groups of both indices and price interventions in the market explains, at least in part, this odd situation of infl ation along with disinfl ation.

Continuous Revisions Cast Doubts on GDP Advance Estimates

Two recent press releases by the Central Statistics Office substantially revise the new series of National Accounts Statistics. The new releases are more than just routine updates, and entail methodological changes and incorporate new sources of data, perhaps in response to various critiques. Yet, on comparing the advance estimates released with past such estimates, the CSO's latest growth projections once again turn out to be far too optimistic.

Some Puzzling Features of India's Recent GDP Numbers

An analysis of the end-November 2015 data release of the Central Statistics Offi ce raises some issues that must be kept in mind while discussing the state of India's economy. If past trends are anything to go by, economic growth in 2015-16 will not improve in the last quarter as some seem to hope. The movements in the GDP defl ators and the very odd behaviour of a gradual decline in the investment rate together indicate that growth in 2015-16 will not end as earlier forecast.

Surge in Union Government Revenues

The tax revenues of the union government have surged in the first half of 2015–16, growing much faster than budgeted. Indirect taxes led the rate of growth of tax revenue collections, while direct tax collections grew less than expected. Though higher revenue is welcome, indirect taxes are nonetheless regressive, and higher indirect tax revenue will only accentuate income inequalities in India.

Are Corporates Overleveraged?

There is concern that corporations have borrowed too much, and that therefore bank balance sheets are strained as well. Contrary to this popular view, it is argued here that the company finance data of the corporate sector in general does not suggest that this is so.


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