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This magnificent shot of the Himalayas and the Kanchenjunga, taken from Darjeeling is courtesy of Prasad V

? ? ???? ?? ?????? ? ???? ?? ??????????? ? ?????????????? ??? ??
OM Asato ma sadgamaya, tamaso ma jyotirgamaya,

mrityormamritam gamaya
OM (Lead me) from falsehood to truth,

from darkness to light, from death to immortality.

Brihadaranyaka Upanishad,I:3,28
 

 

FAQ on Economic Performance

1.Why is Economic History Important ?

For years it was alleged that India was condemned to experience a low rate of economic growth,  derisively referred to as a Hindu rate of growth, even though the economy was at a dismally low level to begin with. It was also derisively alleged that there were structural reasons for such a low rate of growth having to do with the sloth of the average Indian worker. The fallacy with this line of argument is that for most of History, India was one of the dominant countries in the world economy rarely falling below 2nd place. It was only in the 1600's that India began a slow descent to the depths where it had descended at the time of independence. Angus Maddison has done a yeoman job in compiling  the data leading to the inescapable conclusion that India was a major player in the world economy for well nigh 2 millennia if not longer and that the present day poverty of the bulk of the people is by no means a characteristic that has been invariant throughout her History, but is in fact an artifact of several centuries of Islamic autocracy coupled with the greed and incompetence of the British colonial overlord. It is apropos to recall in this context Napoleons dictum namely 'attribute not to malice that which can be ascribed to incompetence'. It is clear that India is in the process of clawing its way back from the depths of the quicksand like bottom and is now poised to be the 3rd largest economy in the world on a PPP basis

2. What is meant by PPP basis

PPP stands for Purchasing Power Parity. It is determined using a basket of goods and services to determine the actual purchasing power of the currency, in this case the Rupee vis a vis the official exchange rate of the Re versus other major currencies. This is definitely the common sense measure since that is what your money would buy. For example the official exchange rate of the $ versus the Re is about 45. But we all know that the $ will not buy 45 Rs worth of goods, except in rare cases such as Gasoline and a few manufactured goods. I have been observing the purchasing power of the $ in India over the years and it has been my observation that it roughly follows the square root law. in other words, the actual purchasing exchange rate is the square root of the official exchange rate. Thus, if we take the square root of 45 we get roughly a PP exchange rate(PPER) of 6.6, that is a $ will buy approximately 7 Rs worth of goods in India. Therefore, a PPPGDP = PPER *GDP in US $

 

Here are some interesting estimates of India's share of the World economy compiled by Angus Maddison at the University of Groningen, Netherlands

Estimates of GDP of leading countries through the ages

GDP (PPP) ranking in 2004 (World Bank)       

GDP (PPP) Ranking (IMF)                                                    

 

 

 

 

 

 

 

 

 

 

 

 

 

Angus Maddison rewrites economic history again. - book review

Angus Maddison

Angus MADDISON

Born in 1926 in Newcastle-on-Tyne, England, Angus Maddison is Emeritus Professor at the University of Groningen in the Netherlands and Honorary Fellow of Selwyn College, Cambridge. He was educated at Cambridge, McGill, and Johns Hopkins universities, before teaching at the University of St Andrews in Scotland. His professional relationship with the OECD began even before the Organisation's birth. He was Head of the OEEC Economics Division from 1953 to 1962 when the organisation became the OECD. From 1963 to 1966, he was a Fellow of the newly created OECD DevelopmentCentre. He left the Organisation in order to undertake research for the Twentieth Century Fund and Harvard University's Development Advisory Service but, by 1971, Professor Maddison was back at the OECD as Head of the Central Analysis Division, a post he retained for seven years.

Angus Maddison has been an advisor to the governments of Brazil, Ghana, Greece and Pakistan and has travelled widely in developing countries as part of his research interests. His major research interest today is the assessment of the forces affecting the economic growth performance of nations, with particular emphasis on quantitative analysis in historical and comparative perspectives.

Professor Maddison is the author or co-author of 25 books and a great many articles in academic and financial journals.

 

 

Angus Maddison, The World Economy: A Millennial Perspective

Martin Wolf: What India must do to outpace China

Getting India Right

India Rising (ABC news video where he makes specific mention of the fact that knowledge is worshipped. Welcome ABC to the land where Saraswati reigns as the Deity of Knowledge)


 

For those who missed the symbolism of Indian flags draped from the White House’s Old Executive Office Building, President George Bush’s words on the morning of July 18, 2005, while standing next to Indian Prime Minister Man Mohan Singh, drove home an emerging reality with trademark pithiness: “The relationship between our two nations has never been stronger, and it will grow even closer in the days and years to come.” Combined with the Bush administration’s visible push to strengthen Japan’s hand in managing Asian security, the Indian prime minister’s visit to Washington cemented a growing de facto strategic partnership between the United States and India ...

There’s More to Growth than China by Martin Feldstein

Martin Feldstein's association with India predates his recent renewed Interest in the subcontinent to the early years whenthefirstFive year Plans were being formulated by P C Mahalanobis

China and India move up together in the growth league tables

It was bound to happen, and finally has. Bloomberg reports this morning that China's Economy Grew 9.9% in 2005, Passing U.K. as 4th-Largest (based on market exchange rates):

China's economy grew 9.9 percent in 2005, probably overtaking the U.K. as the world's fourth largest, powered by record exports and investment in manufacturing. Gross domestic product rose to 18.2 trillion yuan ($2.3 trillion) after expanding 10.1 percent in 2004, statistics bureau Commissioner Li Deshui said today in Beijing. Investment in urban areas jumped 27.2 percent last year, he said.

The economy grew 9.9 percent in the fourth quarter from a year earlier after expanding a revised 9.8 percent in the previous three months, the NBS said today. Economists forecast growth of 9.5 percent in the quarter and 9.8 percent for the full year, according to a Bloomberg News survey.

Li told reporters he's "cautiously optimistic'' about China's growth outlook for this year. "The driver of the economy is shifting from investment to a more balanced situation based on consumption,'' he said. Average GDP growth of 10 percent is sustainable for "many years,'' said Li.

...The U.K. economy was worth $2.14 trillion in 2004, according to the World Bank, and the Organization for Economic Cooperation and Development has forecast 1.7 percent growth for the country in 2005. The U.S. economy, which measured $11.7 trillion in 2004, is the world's largest.

Love that last sentence - just in case you didn't know! Meanwhile, today's Financial Express reports 'India to be world No. 3':

India will surpass Japan as the world's third largest economy in 2006 as measured in Purchasing Power Parity (PPP), according to a forecast by a US professional services firm. India's economy, measured in PPP terms, will eclipse the $4 trillion mark in 2006, making it equal to or greater than Japan's. Only the United States and China will possess larger economies, according to Keystone India's Chief Economist William T. Wilson.

"The results of liberalizing strategic sectors such as telecom, banking, aviation and real estate are now beginning to show. After growing at 8.5 per cent and 6.9 per cent in 2003 and 2004 respectively, India's economy is expected to grow 7.8 per cent in 2005-2006 (fiscal year ending in March) then decelerate modestly to 7 per cent in 2006-2007.

As my previous post Can China overtake the US? pointed out, China is already the second largest economy on a PPP basis - and should outstrip the United States within the next decade or two.

India tilts to the west as the world's new poles emerge by Charles Grant

 

Key Economic Indicators* For China vs. other Leading  Countries

 
                 
Key Indicator     China USA Japan Germany  
                 
GDP Growth Rate (%) 9.5 4.3 2.6 2  
GDP (US$ billion)   1,601 11,750 4,621 2,673  
PPP (US$ billion)   6,913 11,175 3,612 2,318  
GDP Per Capita (US$) 1,227 39,991 36,184 32,404  
PPP Per Capita (US$) 5,299 38,031 28,278 28,104  
Current Account Balance/GDP (%) 2.4 -5.4 3.4 4.4  
Fiscal Balance/GDP (%)   -2.2 -4.9 -6.9 -3.9  
Inbound (US$ billion)   53.5 29.8 6.3 12.9  
Outbound (US$ billion)   1.8 151.9 28.8 2.6  
                 
* Based on 2004 data except FDI    
*** FDI based on 2003 data      
 

Source IMF, World   Economic Outlook Database

 

 

 

 

 

 

 

 

Contact Us   l   About Us   l   Activities   l   Contact Us   l   Core Values   l   Newsletter

Copyright ŠKosla Vepa

 

View My Stats
Google
WWW indicethos.org

 

Who are We?

What do we do?

Latest News

Free Resources

Links

 

 

 

This magnificent shot of the Himalayas and the Kanchenjunga, taken from Darjeeling is courtesy of Prasad V

? ? ???? ?? ?????? ? ???? ?? ??????????? ? ?????????????? ??? ??
OM Asato ma sadgamaya, tamaso ma jyotirgamaya,

mrityormamritam gamaya
OM (Lead me) from falsehood to truth,

from darkness to light, from death to immortality.

Brihadaranyaka Upanishad,I:3,28
 

 

FAQ on Economic Performance

1.Why is Economic History Important ?

For years it was alleged that India was condemned to experience a low rate of economic growth,  derisively referred to as a Hindu rate of growth, even though the economy was at a dismally low level to begin with. It was also derisively alleged that there were structural reasons for such a low rate of growth having to do with the sloth of the average Indian worker. The fallacy with this line of argument is that for most of History, India was one of the dominant countries in the world economy rarely falling below 2nd place. It was only in the 1600's that India began a slow descent to the depths where it had descended at the time of independence. Angus Maddison has done a yeoman job in compiling  the data leading to the inescapable conclusion that India was a major player in the world economy for well nigh 2 millennia if not longer and that the present day poverty of the bulk of the people is by no means a characteristic that has been invariant throughout her History, but is in fact an artifact of several centuries of Islamic autocracy coupled with the greed and incompetence of the British colonial overlord. It is apropos to recall in this context Napoleons dictum namely 'attribute not to malice that which can be ascribed to incompetence'. It is clear that India is in the process of clawing its way back from the depths of the quicksand like bottom and is now poised to be the 3rd largest economy in the world on a PPP basis

2. What is meant by PPP basis

PPP stands for Purchasing Power Parity. It is determined using a basket of goods and services to determine the actual purchasing power of the currency, in this case the Rupee vis a vis the official exchange rate of the Re versus other major currencies. This is definitely the common sense measure since that is what your money would buy. For example the official exchange rate of the $ versus the Re is about 45. But we all know that the $ will not buy 45 Rs worth of goods, except in rare cases such as Gasoline and a few manufactured goods. I have been observing the purchasing power of the $ in India over the years and it has been my observation that it roughly follows the square root law. in other words, the actual purchasing exchange rate is the square root of the official exchange rate. Thus, if we take the square root of 45 we get roughly a PP exchange rate(PPER) of 6.6, that is a $ will buy approximately 7 Rs worth of goods in India. Therefore, a PPPGDP = PPER *GDP in US $

 

Here are some interesting estimates of India's share of the World economy compiled by Angus Maddison at the University of Groningen, Netherlands

Estimates of GDP of leading countries through the ages

GDP (PPP) ranking in 2004 (World Bank)       

GDP (PPP) Ranking (IMF)                                                    

 

 

 

 

 

 

 

 

 

 

 

 

 

Angus Maddison rewrites economic history again. - book review

Angus Maddison

Angus MADDISON

Born in 1926 in Newcastle-on-Tyne, England, Angus Maddison is Emeritus Professor at the University of Groningen in the Netherlands and Honorary Fellow of Selwyn College, Cambridge. He was educated at Cambridge, McGill, and Johns Hopkins universities, before teaching at the University of St Andrews in Scotland. His professional relationship with the OECD began even before the Organisation's birth. He was Head of the OEEC Economics Division from 1953 to 1962 when the organisation became the OECD. From 1963 to 1966, he was a Fellow of the newly created OECD DevelopmentCentre. He left the Organisation in order to undertake research for the Twentieth Century Fund and Harvard University's Development Advisory Service but, by 1971, Professor Maddison was back at the OECD as Head of the Central Analysis Division, a post he retained for seven years.

Angus Maddison has been an advisor to the governments of Brazil, Ghana, Greece and Pakistan and has travelled widely in developing countries as part of his research interests. His major research interest today is the assessment of the forces affecting the economic growth performance of nations, with particular emphasis on quantitative analysis in historical and comparative perspectives.

Professor Maddison is the author or co-author of 25 books and a great many articles in academic and financial journals.

 

 

Angus Maddison, The World Economy: A Millennial Perspective

Martin Wolf: What India must do to outpace China

Getting India Right

India Rising (ABC news video where he makes specific mention of the fact that knowledge is worshipped. Welcome ABC to the land where Saraswati reigns as the Deity of Knowledge)


 

For those who missed the symbolism of Indian flags draped from the White House’s Old Executive Office Building, President George Bush’s words on the morning of July 18, 2005, while standing next to Indian Prime Minister Man Mohan Singh, drove home an emerging reality with trademark pithiness: “The relationship between our two nations has never been stronger, and it will grow even closer in the days and years to come.” Combined with the Bush administration’s visible push to strengthen Japan’s hand in managing Asian security, the Indian prime minister’s visit to Washington cemented a growing de facto strategic partnership between the United States and India ...

There’s More to Growth than China by Martin Feldstein

Martin Feldstein's association with India predates his recent renewed Interest in the subcontinent to the early years whenthefirstFive year Plans were being formulated by P C Mahalanobis

China and India move up together in the growth league tables

It was bound to happen, and finally has. Bloomberg reports this morning that China's Economy Grew 9.9% in 2005, Passing U.K. as 4th-Largest (based on market exchange rates):

China's economy grew 9.9 percent in 2005, probably overtaking the U.K. as the world's fourth largest, powered by record exports and investment in manufacturing. Gross domestic product rose to 18.2 trillion yuan ($2.3 trillion) after expanding 10.1 percent in 2004, statistics bureau Commissioner Li Deshui said today in Beijing. Investment in urban areas jumped 27.2 percent last year, he said.

The economy grew 9.9 percent in the fourth quarter from a year earlier after expanding a revised 9.8 percent in the previous three months, the NBS said today. Economists forecast growth of 9.5 percent in the quarter and 9.8 percent for the full year, according to a Bloomberg News survey.

Li told reporters he's "cautiously optimistic'' about China's growth outlook for this year. "The driver of the economy is shifting from investment to a more balanced situation based on consumption,'' he said. Average GDP growth of 10 percent is sustainable for "many years,'' said Li.

...The U.K. economy was worth $2.14 trillion in 2004, according to the World Bank, and the Organization for Economic Cooperation and Development has forecast 1.7 percent growth for the country in 2005. The U.S. economy, which measured $11.7 trillion in 2004, is the world's largest.

Love that last sentence - just in case you didn't know! Meanwhile, today's Financial Express reports 'India to be world No. 3':

India will surpass Japan as the world's third largest economy in 2006 as measured in Purchasing Power Parity (PPP), according to a forecast by a US professional services firm. India's economy, measured in PPP terms, will eclipse the $4 trillion mark in 2006, making it equal to or greater than Japan's. Only the United States and China will possess larger economies, according to Keystone India's Chief Economist William T. Wilson.

"The results of liberalizing strategic sectors such as telecom, banking, aviation and real estate are now beginning to show. After growing at 8.5 per cent and 6.9 per cent in 2003 and 2004 respectively, India's economy is expected to grow 7.8 per cent in 2005-2006 (fiscal year ending in March) then decelerate modestly to 7 per cent in 2006-2007.

As my previous post Can China overtake the US? pointed out, China is already the second largest economy on a PPP basis - and should outstrip the United States within the next decade or two.

India tilts to the west as the world's new poles emerge by Charles Grant

 

Key Economic Indicators* For China vs. other Leading  Countries

 
                 
Key Indicator     China USA Japan Germany  
                 
GDP Growth Rate (%) 9.5 4.3 2.6 2  
GDP (US$ billion)   1,601 11,750 4,621 2,673  
PPP (US$ billion)   6,913 11,175 3,612 2,318  
GDP Per Capita (US$) 1,227 39,991 36,184 32,404  
PPP Per Capita (US$) 5,299 38,031 28,278 28,104  
Current Account Balance/GDP (%) 2.4 -5.4 3.4 4.4  
Fiscal Balance/GDP (%)   -2.2 -4.9 -6.9 -3.9  
Inbound (US$ billion)   53.5 29.8 6.3 12.9  
Outbound (US$ billion)   1.8 151.9 28.8 2.6  
                 
* Based on 2004 data except FDI    
*** FDI based on 2003 data      
 

Source IMF, World   Economic Outlook Database

 

 

 

 

 

 

 

 

Contact Us   l   About Us   l   Activities   l   Contact Us   l   Core Values   l   Newsletter

Copyright ŠKosla Vepa

 

View My Stats
Google
WWW indicethos.org