Secret of GDP rate going up and likelihood of its sustainability going forward

Saturday, 09 June 2018

Secret of GDP rate going up and likelihood of its sustainability going forward

Greetings from Hitesh! Govt has declared GDP data in the June first week and as per the same GDP has moved up to 7.7% in the first quarter of 2018. Many economist or educationists have shared their views but not a single guy has been able to point out to the ground realities and the real secret of increase in GDP growth rate. I am a very small student of investment and I am trying my hand today. Hope you may like my study.

Ground Realities: -

Look at all small and medium shop and business owners and all of them are crying foul over MODI’s policies which are benefiting the large corporates and these guys are slowly and gradually going out of the business or just running their show by hook or crook. Frankly economy has suffered a lot at the ground realities and at the mass levels thanks to Mohammad Tuglaq kind of demonetisation and bad implementation of GST.  

But the GDP rate is going up and it is a fact. I will share some of the reason for GDP rate moving up.

Shopping Habits: -

Over the years we have moved up from off line to one line shopping. As per the online data FLIPKART had sales of some Rs.19000 crs in 2017 and amazon had income of some Rs.2250 crores in 2016. I am using available online data to prove my point. I am not sure about AMAZON’s figure as it may be their commission income and not the gross sales value as reported by FLIPKART.

These purchases were done with CASH in the past and not reported or semi reported. But now, these total figures are added to the GDP and it supports the GDP growth rate. So, frankly, its not the actual growth of the economy but just reporting dynamics which led to increase in income.

Mall Culture: -

As per 2018 figures, reliance retail has a sale of some Rs.69000 Crs. These kinds of malls are coming in small towns also. Once again, these sales are reported as they are sold with proper bills. Increase in mall culture is adding to the GDP figures. Apart from Reliance, we have BIG BAZAAR and other N number of small and big malls and they are expanding.

OLA & UBER: -

They are running close to 5 lakh taxis around Indian in various cities. It may be more also. On an average the revenue per day per taxi is Rs.2000. This means we have Rs.100 Crs added to GDP daily from just TAXI. Earlier these figures were not added to the GDP.

GOLD: -

India imported 901 tons of gold in 2017. From July, 2017, it was mandatory to charge 3% as GST on GOLD. These has added to substantial income to the GDP.

Credit Card and Other Payment Options: -

Since demonetisation various online and mobile payment applications are available. They have also added to the Economy as all the transactions are reported. The young generations are finding it easy to use online and mobile payment methods compared to CASH usage by earlier generations.

Effects on GDP: -

I have just enlisted some major factors which are adding to GDP figures. Frankly, it is not NEW ADDITIONS or REAL INCREASE in economy but just bringing unreported revenue streams to the economy. This is also a BIG achievement for MODI government in a way.

Can it continue?

The moot questions for share market TEJI is whether GDP growth rate will continue or not in coming quarters?

There can be N number of FACTORS going forward affecting the GDP growth. Being an election year, MODI may announce some good measures to woo the affected business communities and it may do wonders for GDP numbers. However, apparently, the HABIT factors as mentioned above will keep on adding to GDP and it should move up. But if the fresh streams of GDP do not join, the real economy will get its BAD effect in 2019!!

Wish you a very HAPPY WEEKEND.

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Live With Passion…Invest With Passion.

Hitesh Parikh.