Thread: Indian Economy

Originally Posted by Vaman

errr.. I dont have problems with statistics or mathematics and its use in any way. I just have a problem with invalid inferences being drawn from them.
I am sorry that offends you.
I dont claim to be a genius in science or mathematics, but heck I dont pretend to know everything and put down "development" economists either.

And this is a thread on "Indian Economy" btw, NOT sessions on your brand of economics. Someone like IG4U's questions on the economy -or part of it - deserve as much a say in it instead of being brushed away dismissively.

"Originally Posted by indianguy4u
this is perfectly acceptable,

But read this quote


If my understanding is right, then there is room for debate & research.




There certainly is room for debate and research which is why i psted the first article which ended the debate.

But no worries some developmental economists still debate it and there is nothing wrong in that and certainly if you can find their work and present your case, i would most welcome it."

"Verman, i have not used the words "you know nothing" blablabla because this is a forum and everyone's opinion counts.

I dont have much time to argue about something i do for a living on a daily basis, however i dont mind any comments and i respect and value each one of them. I have a million academic papers to back me up on the matter and would be willing to post them one by one due to time constraints, let us keep this friendly and impersonal."


but then came the passable quant skills comments from you and it became a personal thread, anyway i have no problems, there are critisisms to econometrics and there is nothing wrong with that, the paradox not being one of them however, anyway its done and let us move on.

Had you mentioned the famous Lucas critique about forecasting, i would have given you thekudos. Anyway take it easy and I hope that you continue to contribute on this thread. I am also presentin what academia believes and what the DOMINANT THEORY is out there supported by them, i did not make any of this up myself and i did not discredit development economics, i questioned their approach and had you read a recent paper, you would know what I am talking about.

take care

Vaman, sameer & monk,
I dont question the theories put forward by sameer, but how much valid are these in third world[developing] country like ours where a substantial portion of economy is still black & direct tax collection from individuals & Co is pittance. While such theories may hold for first world countries but its difficult to co-relate wholly to such theories in country like ours.

It depends on which theory you are talking about. If you can give an example then i can answer or someone else can.

Originally Posted by Sameer

It depends on which theory you are talking about. If you can give an example then i can answer or someone else can.

Any theories. B'coz theory is made in perfect world senario. In India black eco is reputed to be 2 or 3 times the size of white economy. Tell how can u use in such senarios.

The biggest critique to forecasting is the Lucas Critique, ie unless you can guarantee that all selected variables are inherently stable and you can take care of endogeneity in your regressions because you can have more than one equation, i oncehad a model with 124 and it was still too little, anyway, since you may not be able to guarantee that, how can you predict it.

In the case of India and the SENsex, there is always a 4-9% var error because of other factors you may not be able to measure easily while the CSO has done much to resolve thisissue in recent years but again you should not generalize from what I said, it depends on what you are talking about.

In the general case of the Lucas critique, it is possible to get around it via various statistical tests, some other economists reject the critique, also using simultaneous computer generated models cancels out the problem as long as your equations are correctly specified.

Again I am being general because i dont really know what you want to concentrate on.

The size of the black market and the sensex?

there would be little linkage btw the two.


Also when economists talk about GDP forecasting in general, it is the organized sector they talk about, also black markets are present in other developing countries and never impeded projections, it again depends on how specific you are willing to be, a very general model may very well suffer from misspecification as you may not be able to include all vvariables.

Also finally there is such a thing as the error term, how this related to the black market, the error term has for mean zero and constant variance and this incorporates the black market and other unknowns, again this is a complicated story...

To answer your question simply, only models with multiple equations minimize the error term which includes all the unknowns.

problem solved but agreed its honestly not that easy and impossible in certain cases BUT there are statistical and mathematical tests to figure out if your model is misspecified and thus more work is needed on your part. Its a complicated story but actualy it was something i always wondered as well until i learnt about it.

in simple terms

y= b1+b2*x2 real equation

y hat= bihat+ b2hat*x3+ ut is your estimable equation
Your black market would be ihncluded in that error term.

where ut has zero mean and constant variance and includes the unknowns. If it is strong you will know, again this is the simplest form and there are n possible equations with n variables and it goes crazy.


Now if you are attentive you may realize the following

hey wait a sec there what guarantee is there that the error term including all those unknowns will have expectations of zero and constant variance?

Ans: You may not know the answer to this until you run your system of equations, there are statistical tools that will let you know if you are violating your OLS assumptions. There are then corrective methods such as GLS and the reverse loop method to resolve the issue. Finaly you may have to respecify your mkodel and spend another couple of years researching what you are omitting and respecify your model and it has happned to anyone who has done some econometrics and its not a nice thing to happen to you but you know it when it happens, you may not be able to solve it but then you dont publish that.

Lagging variables and using instrumental variables will also take care of the unknown factor but i dont know how detailed you want me to answer, sorry.

hope that helps. Its a good question though

Guys back to topic please, MOnk will be poed.


Premji plays down Bangalore's woes

October 19, 2005 16:13 IST

Wipro Chairman Azim Premji, who had been second to none in criticising Karnataka government over inadequate infrastructure in the past, on Wednesday said the issue could be sorted out by talking to government.
Asked whether there was a "discerning discomfort" among the IT industry, he said the issue of infrastructure "was being taken out of proportion."

"Too much is being read into lines," he said, adding that the issue instead could be solved by talking one-to-one with the government.

The IT industry had locked horns with the government on the issue of infrastructural bottlenecks in Bangalore but the government had recently promised schemes to overcome the problems.

Wipro had been in the process of using up its space in Bangalore and had sought land in Mysore and Mangalore to expand its business.

On shortage of engineers to meet the growing needs of the software industry, he said India would produce 350,000 engineers by this financial year.
http://us.rediff.com/money/2005/oct/...q=bp&file=.htm


Infrastructure is our biggest problem in India, the Babus are at it again, recently our FM visited Shanghai and had a headache.

India has a problem of too much bureaucracy, no govt seems willing and able to solve it.

Maruti targets 1 million car capacity by 2010

Our Corporate Bureau / New Delhi October 20, 2005



India's car market is projected to expand to about 2 million in five years.

Maruti Udyog Ltd plans to expand its manufacturing capacity to a million cars by 2010. The passenger car market leader is now in the middle of a Rs 3,000-crore expansion that will increase its installed capacity from 350,000 units to 450,000 units by the end of 2006 and to 600,000 units in a couple of years.

However, on an annualised basis, its monthly production, due to higher capacity utilisation, is already touching 600,000 units. Reports from the Tokyo Motor Show today quoted Maruti’s Chairman Shinzo Nakanishi as saying that the installed capacity would be increased to a million cars at a cost of about $470 million.

The increase in capacity to a million will be crucial if Maruti is to protect its current market share of about 50 per cent. For, the country’s passenger car market is projected to expand to about 2 million units in five years, up from about a million last year.

The company’s Managing Director, Jagdish Khattar, told Business Standard, “On an annualised basis, the Gurgaon plant is already producing 6 lakh cars. We have taken up 600 acres at our new site at Manesar in Haryana for future expansion.”

Maruti has already undertaken an expansion exercise through a greenfield facility at Manesar.

The company’s board, in March this year, cleared an investment of Rs 3,272 crore to produce cars, diesel engines and transmission units at Manesar.

The new facility at Manesar will operate under Maruti Suzuki Automobiles India Ltd, in which Maruti will hold 70 per cent. The rest will be held by Suzuki.
http://www.businessstandard.com/comm...dx=1&lselect=0


On a side note, is anyone out here an engineer and can tell me about the 2007 M7 of BMW that will apparently have both hydrogen and usual gas in its engine without loss of horse power?

Also can anyone compare various Maruti brands to TAta bands and the immediate competition, ie indica etc, how well are our cars faring?

Monk once this thread hits page 8, you may want to consider creating a new thread.

Tata Indica & its variants are good cars for indian enviournment. Ratan Tata promised an amby from inside & maruti from outside, which Indica fufilled fully.

Originally Posted by indianguy4u

Vaman, sameer & monk,
I dont question the theories put forward by sameer, but how much valid are these in third world[developing] country like ours where a substantial portion of economy is still black & direct tax collection from individuals & Co is pittance. While such theories may hold for first world countries but its difficult to co-relate wholly to such theories in country like ours.

IG4U, I have no issues about you asking questions, all your questions are very valid and quite right actually.
My problem is with converting this thread into an unnecessary war zone and us turning on eachother. That would be dumb.
I am all for good debates, whether between me and sameer or sameer and vaman or you and sameer. Absolutely no problems.

Now to your question about direct tax collection, India's direct tax collection is improving very rapidly, most people are extremely interested in paying their taxes. Of course people would like to pay lower taxes but they surely want to pay. The tax laws in effect currently are extremely solid whatever else people might tell you. There are issues which will eventually get sorted out as tax net widens and tax rates decline. Like vaman said I dont want to say who I am and then have others criticize me, but I can't help saying that I am a Chartered Accountant and therefore I know what I am talking about.

So all the theories will hold good as much for India as anyother country only in the case of India the "Confidence level of the distribution" might be lower. India's laws are not as weak as you think.

Originally Posted by indianguy4u

Tata Indica & its variants are good cars for indian enviournment. Ratan Tata promised an amby from inside & maruti from outside, which Indica fufilled fully.

I watched the car review on the BBC and they talked about poor handling at high speeds