Is the Indian love for gold tapering?

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Three months is a small time to determine whether it’s a trend or not. But the latest GDP numbers released by the Statistics Ministry shows India’s love for gold has come down by nearly half.

First, a background. There are two ways to estimate GDP growth numbers. The first is by estimating what different industries like agriculture, manufacturing, construction etc., have produced. The second way is to estimate the expenditure by private consumers, government and investment by companies.  This is where you will find ‘valuables’.

Valuables are money spent in buying precious stones and metals like gold, diamonds and silver. Some might argue these are investments, and therefore capital. But they cannot be classified as capital as they are stored and not put to use. So a separate head is created while estimating GDP.

Measured at 2011-12 prices, valuables stood at Rs 22,129 crore in April – June 2016 as compared to Rs 43,138 crore in April – June 2015.

The big question: Is this an exception or an indicator of Indians finally moving away from buying gold?

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How Brazil’s economy compares with that of India on eight economic indicators

This piece originally appeared on Livemint.com

 

The Brazilian economy has lost its tailwind between 2007, when it threw its hat in the Olympic ring, and 2016, when it will host those Games, raising the stakes for it that much more. How Brazil has been challenged on eight economic indicators in the last decade and how it compares with India.

Growth: GDP growth

The last BRIC-worthy year that Brazil had was 2010. And last year, its economy even shrunk.

 

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Finances: current account balance

Brazil’s current account has gone from surplus to deficit, and mounted alarmingly in 2015.

 

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Stocks: S&P global equity indices

Annual returns from Brazilian stocks have been in the red for each of the past five years.

 

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Investment: gross capital formation

Brazil’s investments in capital assets, which yield future payoffs, have declined in the last two years.

 

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Prices: inflation, consumer prices (annual percentage)

After floating in moderate territory for years, inflation in Brazil surged in 2015 to 9%.

 

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Consumption: household final consumption expenditure per capita growth

The average spend by Brazilian households was muted in 2014 and declined in 2015.

 

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Exports: export volume index

Brazil’s exports have barely grown in volumes in the last decade, increasing its reliance on domestic growth.

 

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Currency: official exchange rate per us dollar

After several years of strengthening, the Brazilian Real depreciated nearly 50% in 2015.

 

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News in Numbers, May 3, 2016: Factory output in March, three earth-like planets discovered…

25%

What is it? The percentage of shares state-owned National Aluminium Co Ltd (Nalco) has agreed to buy back from the government.

Why is it important? This is to partly help the government raise funds to meet its fiscal deficit target of 3.5% of GDP for 2016-17 after having contained it at 3.9% of GDP in 2015-16. The price at which Nalco will buyback the shares is yet to be fixed and if it is done at market prices, it would cost the firm $450 million (less than Rs 3,000 crore).

Tell me more: It remains to be seen if this would affect Nalco’s expansion plans, which includes setting up of a $2-billion smelter facility in Iran. The company’s chairman has claimed otherwise.

< 40 crore

What is it? The number of unorganised workers who would be benefitted by government schemes including insurance and pension using Aadhaar and Jan Dhan accounts.

Why is it important? The near-universal coverage of Aadhaar (93% of adults have Aadhaar cards and 25 crore bank accounts linked) would enable the government to do away with its earlier plans of issuing social security smart cards to unorganised workers. This would help save the government an estimated Rs 15,000-Rs 20,000 crore on the smart cards’ project, besides cutting down on implementation time.

Tell me more: Unorganised workers, who account for nearly 90% of the total workforce in the country, face problems including inadequate legal protection in terms of job security, wage-related issues and poor access to formal credit.

6.4%

What is it? The growth of the combined output of eight infrastructure sectors in March 2016 compared with a year-ago period.

Why is it important? This was the fastest growth in 16 months, mainly due to a sharp increase in fertiliser, cement, electricity and refinery products, indicating that the economy may be on the recovery path. However, the higher numbers could be because of the base effect as factory output contracted by 0.7% in March 2015.

Tell me more: Interestingly, Nikkei’s Manufacturing Purchasing Managers’ Index, a composite indicator of India’s manufacturing activity based on a survey, declined to a four-month low – indicating trends in contrast to the factory output numbers.

2%

What is it? The percentage of water left in 11 major dams in Marathwada region covering eight of the 36 districts in Maharashtra, compared to 10% a year ago.

Why is it important? The region is facing its fourth drought year in the last five years. With a month and a half for the monsoons to set in, only three dams have live water storage (water that can be used) while the rest are on dead storage levels (water that cannot be drained out by gravity but needs to be pumped out). Officials say they would manage with the available water.

Tell me more: Reduction in crop production by 70% over the last one year is not helping the situation. 370 farmers have reportedly committed suicide in the region in the last four months.

3

What is it? The number of earth-like planets an international team of scientists have discovered.

Why is it important? This is the best possible chance to find traces of life outside the solar system, scientists say, taking research one step further in finding potentially habitable planets. All the three planets may have regions with temperatures apt for sustaining liquid water and life, and the availability of technology and proximity of these planets makes the research all the more promising.

Tell me more: The three planets, which orbit a small star, are 39 light years away.

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Appraisal of Narendra Modi’s performance on three economic pivots

This piece originally appeared on Livemint.com

 

When he came to power, Narendra Modi positioned three things as pivots—and talking points—of his economic stratagem. Appraising them a year on shows Modi’s performance on these three counts is not significantly better than that of the United Progressive Alliance in its last year—on some metrics, it’s worse—and that his promise of a breakout remains, so far, just that: a promise.

1. Reviving investments

Modi wants the wheels of the economy to turn faster. But growth in credit continues to taper, especially to industry, which accounts for 45% of all non-food credit. And in spite of a stronger centre, a greater percentage of projects with an ultimate reporting to the central government and above the size of Rs.150 crore are seeing implementation delays.

 

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2. Make in India

After the lows of mid-2014, the numbers on project proposals, investments and implementation are inching up. But they are still below or around what UPA-II recorded for most of its final year. The number of new companies being set up is also seeing an upward tick, but it’s still business services and not manufacturing—a key pivot of Modi’s revival plan—that is pulling the numbers.

 

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3. Fiscal federalism

Modi says states should have a greater say in shaping their economic choices. The 14th Finance Commission has increased the states’ share in divisible taxes and duties to 42%, from 32%, yielding a Rs.1.86 trillion windfall for states in 2015-16. But the sharing of taxes is one of three ways in which the centre transfers funds to states. The second is grants and loans, which is also increasing. The third is financing various schemes and programmes, where the centre is pulling back to the tune of Rs.1.3 trillion. Thus, the net giveaway to states in 2015-16 is Rs.55,723 crore, an increase of 6.3%.

 

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