## Sunday, February 28, 2010

### Responses to the Budget announcements

1. I wish the finmin would state the inflation (or gdp deflator) and gdp numbers together for the past year and for the forecasts (and that may mean quoting RBI's policy target for inflation). The point being that in the past two years wpi inflation has outpaced GDP growth so I fail to share the enthusiasm of a "recovery" when it isn't a "real" one. Real growth: gdp - wpi inflation averaged 4% in 2005-2007. So, when the finmin says that the target for next fiscal is going to be 9% growth, I'd like to know what his inflation expectations are: 5% as for the 2005-7 period or higher? My point is not to be pessimistic but to avoid fetish for higher growth rates without regard for real growth rates or price stability. Looking at the last two years what would have been better: 6% nominal growth with 6% inflation and a higher deficit or 3% nominal growth with 3% inflation and a lower deficit?

2. @Anonymous - The reported GDP is real GDP i.e. after accounting for inflation and not nominal GDP.

India's Nominal GDP (i.e. Real GDP + inflation) has been over 10% for some time.

3. @ anon and @abhikush

The greatest fool can ask what the wisest man can not answer

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