PRIDE AND PREJUDICE


President Donald Trump with China’s President Xi Jinping during a bilateral meeting.

The world is crumbling due to a trade war between two giant China and USA and no one is blinking their eyes to prove, each one is ready for full-fledged trade war loaded with (USA) intellectual properties and (China) skilled manpower. The current scenario changed when both country premier decided to cease-fire in G-20 side meeting in Buenos Aries and on the same day China telecom behemoth Huawei CFO Meng Wanzhou was arrested at Vancouver International Airport in Canada on the request of USA for violating sanction on Iran by doing business with Iran and not disclosing to the international banks and putting them on serious consequences. The matter got even worse because she is the daughter of Ren Zhengfei(Founder and President) of Huawei and former member of CCP,  China is not taking it lightly for many reasons here are few

  1. Huawei is  leading tech company in mobile phone making second in the world after Samsung
  2. Leader of the 5G service technology in the world and USA consider it as a threat
  3. First time they are in dominant position in future technology

China embassy in Canada has called it an aggressive move and violation of human rights. She was released on bail by paying $10 million but the tension has escalated again and the biggest looser of this game was Canada, China in response has caught two Canadian citizens they have told press that one of them were working in a company not registered in China but it’s seen as a counter attack. China’s pride (Huawei) is prejudiced by American as threat though it’s not known whether Huawei is sharing data and spying for Chinese government as claimed by USA but no case has been found till now.Future is uncertain of the world rest all will depend on how trade war will behave, whether it will stop or further escalate

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GDP Debate

RajivKumar_EPS11144 GDP, a term which is quite debatable after the present government in India just shifted the base year from 2004-05 to 2011-12 as well as also made some modification in the calculating procedure of GDP.

What GDP is?

GDP in a laymen language is a sum of three words “Gross”+”Domestic”+”Product”. To Understand GDP we just need to know about the meaning of these three words separately. Gross means total(sum of all which it encompasses), Domestic means (inside a particular boundary in this scenario country) and product(anything which is produced ) here includes merchandise goods as well as services.

It is calculated by taking into accounts all the domestic consumption, trade balance(Export-Import), gross investment and government expenditure. Import is subtracted because that is not produced within the boundaries of that country. GDP=C+I+G+X-M C=Consumption, I=Investment, G=Gross, X =Export, M=Import

What is Base-Year?

It is the year of initiation for any financial data or statistics. India has been calculating different indices(CPI and WPI), GDP growth as 2011-12 as base year since 2011-12

What has happened now?

CSO(Central Statistics Office) has released the back series data of years 2005-11, which signifies that GDP growth is quite lower than what was calculated previously. Thus the growth rate of UPA regime which was previously surging over 8% has been lowered to 6.7%. While the UPA regime was in power investments were surging at very high rates(37.4%) but in the NDA regime investment plunged to significantly lower levels(30.2%). Even the network penetration had been very high in the UPA regime.

Newer Data has imbibed many modifications to previous one

Some are following as given by Rajiv Kumar

  1. For the Manufacturing sector, Data source has been changed from ASI(Annual Survey of Industries) to MCA(Ministry of Corporate Affairs) level.

 

2. The growth of Mobile phone subscribers changed to Amount of data and minutes of voice.

In conclusion, the range of various sectors has been diversified as well as the methodology CSO has adopted now is in sync with UN’s methodology of System of National Accounts 2008.

We can say that it will have some political implications on the upcoming elections of Lok Sabha. But from the economic point of view, there existed a dire need to re-calibrate our methodology with the structural changes that had occurred in the previous few years regarding the collection of data.

Economics is the art of distributing very scarce resource for the need of the society’s infinite demand. That is why one needs to re-calibrate their methodologies with changing scenarios.