Archive for July 6th, 2009

India Union Budget 2009-10

July 6, 2009

The much hyped event is finally over – India Union Budget 2009-10.

I am still trying to understand the maze of Indian public finances (btw, just like the budget,  this is an annual exercise as well without any success actually) .

A couple of quick points:


A look at RBI Surveys

July 6, 2009

Irving Fischer Committee of BIS released a very useful publication -The use of surveys by central banks.

RBI has participated extensively in the report and we get some good understanding on various surveys conducted by RBI.

Surveys conducted by Reserve Bank of India
C.L. Agarwal, Reserve Bank of India

Results of inflation expectations survey of households
S.N.S. Tyagi, Reserve Bank of India

 Reserve Bank of India surveys on corporate statistics
V.C. Augustine, Reserve Bank of India

 Surveys for compilation of external sector statistics in India
Narender Singh Rawat, Reserve Bank of India

 Survey of ownership of deposits with scheduled commercial banks in India – evolution, methodology and issues
Deepak Mathur, Reserve Bank of India

 Excellent stuff. It will be great if RBI initiates discussions on the findings of these surveys in a more extensive manner. Frankly, I did not know there are so many surveys.

Limitations in Indian Economics Statistics System

July 6, 2009

RBI Governor, Dr Subba Rao has given an excellent speech on the state and limitations of Indian economics stats system. He cites 5 problems:

(i) Data Revisions: Measuring the economy remains a complex task and data uncertainty is a fact of life. Data revisions are a legitimate part of statistical compilation and dissemination. However, here in India, data revisions and systemic biases in data revisions are more frequent and common place.  Most economies have to contend with an uncertain future; here, in India, we are having to contend with an uncertain past as well.


(ii) Inflation Measurement: currently, the WPI inflation is in negative territory – a sign that could be misinterpreted as the economy being in deflation even when there is no contraction in aggregate demand – while the inflation rates from the four CPIs are in the range of 9-10 per cent

(iii) Information on Leading Indicators for Business Cycles

(iv) Financial Soundness Indicators

(v) Data on Employment: Finally, I come to a major gripe. Globally, trends in employment are one of the most important inputs in setting monetary policy response. Unfortunately, we do not have any reliable nation-wide statistics on employment. Data on factory-sector employment are available from Annual Survey of Industry, but with a large lag that makes it virtually useless for monetary policy purposes. Farm sector employment data are also available at poor frequency and with long lags. Non-farm pay rolls capture employment trends in some economies. But, in India, data on organised sector employment, as obtained from employment exchanges, cover a very small part of the workforce. Against this backdrop, timely and accurate information on employment conditions will enhance our understanding of inflationary dynamics in the economy, and thereby improve the conduct of monetary policy.

I  have always stressed on the need to reform the Indian stats system but finds no takers. It is pretty painful to analyse anything on Indian economy. You take data from one source and prepare a report. Then you get a call/email from someone saying data from such and such source (equally a good source) suggests this trend which is different from your report. And the entire analysis falls flat. And then there are other problems of not finding data, reports though media is ripe of stories on the same.

Good to see RBI Governor talking about the issues. Hope there is some action on the same.

PS. The conference papers are here and here is a brief summary of views and issues.

Riksbank Governor Chat transcript

July 6, 2009

I had pointed to a Riksbank Dep Governor chatting on the web. The transcript is here:

Here are some intereting Qs and some equally interesting answers:

What are you going to do this summer? Henrik

Reply: I am going to take a few weeks’ holiday. I look forward to being able to read something other than all the work documents I usually read.

Why make a repo rate forecast when you change it all the time? Gunnar

Reply: We use the repo rate path to explain our thinking with regard to monetary policy in the slightly longer term. But the path is a forecast, not a promise. When the conditions for the economy change, the forecasts also change, including those for the repo rate. 



She is 62 years, so not really a young Dep Governor as some would expect.


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