India and the Fallacy of the Demographic Dividend

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At times it is very difficult to make sense of a country as complicated as India is. What complicates the situation further is the fact that we have very little data going around in many cases. But then there are broader trends, which one can comment on.

One such thing is the demographic dividend or to put it more precisely India’s demographic dividend. Nearly eleven years back, when I didn’t understand much economics or finance, this was one of the terms I heard people connected with the investment industry, continuously talk about.

India will do well in this decades to come because of its demographic dividend, they said. In fact, some of them are still talking about it.

So what is the demographic dividend? As country progresses it moves from being a largely rural agrarian society to a predominantly urban society. Along the way it changes from being a society with high fertility and mortality rates to a society which has low fertility and mortality rates.

As Ronald Lee and Andrew Mason write in an article titled What is the demographic dividend in the Finance and Development magazine of the International Monetary Fund: “At an early stage of this transition, fertility rates fall, leading to fewer young mouths to feed. During this period, the labour force temporarily grows more rapidly than the population dependent on it, freeing up resources for investment in economic development and family welfare. Other things being equal, per capita income grows more rapidly too.”

The infant mortality rate in India was 75 in 1996. It has come down to 38 in 2015, data from World Bank shows. The infant mortality rate is essentially defined as the number of infants who die before reaching one year of age, for every 1000 live births during the course of a given year.

Along with the infant mortality rate declining, the general technological advances as well as access to medical facilities have improved. This essentially means that in the coming years there will be a huge bulge in the number of young people in the country. In this stage, the workforce of the country will increase dramatically.

There are multiple estimates of what India’s workforce will look like in the years to come. Most of these estimates essentially suggest that India’s workforce is increasing at the rate of one million workers per month and will continue increasing at this rate in the years to come.

The Planning Commission, before it was disbanded by the Narendra Modi government, had made an estimate on India’s workforce in the years to come.

As the 12th Five Year Plan (2012-2017) document pointed out: “One hundred and eighty-three million additional income seekers are expected to join the workforce over the next 15 years.” This essentially means that a little over 12 million individuals will keep joining the workforce every year, in the years to come. This works out to around one million a month. And at this rate, the Indian workforce is expected to be larger than that of China by 2030.

And this is India’s demographic dividend. As these individuals enter the workforce, find work, earn money and spend it, the Indian economy is expected to do well. When economists and politicians talk about an economic growth of close to 10 per cent per year, they are essentially hoping that India’s demographic dividend will play out as it is expected.

But the question is how likely is this? How have things with other countries been in the past? Have countries which were expected to benefit from the demographic dividend benefitted from it?

As Ruchir Sharma writes in his new book The Rise and Fall of Nations—Ten Rules of Change in the Post-Crisis World: “The trick is to avoid falling for the fallacy of the “demographic dividend,” the idea that population growth pays off automatically in rapid economic growth. It pays off only if political leaders create the economic conditions necessary to attract investment and generate jobs. In the 1960s and ‘70s, rapid population growth in Africa, China, and India led to famines, high unemployment and civil strife. Rapid population growth is often a precondition for fast economic growth, but it never guarantees fast growth.”

Sharma then talks about the Arab world which despite being poised to, did not benefit from a demographic dividend. As Sharma writes: “The Arab world provides a cautionary tale. There between 1985 and 2005 the working age population grew by an average annual rate of more than 3 percent, or nearly twice as face as the rest of the world. But no economic dividend resulted. In the early 2010s many Arab countries suffered from cripplingly high youth unemployment rates; more than 40 percent in Iraq and more than 30 percent in Saudi Arabia, Egypt, and Tunisia, where the violence and chaos of the Arab Spring began.”

This is something that India and Indians need to be aware of. The demographic dividend benefits a country if the government of the day is able to create the right environment in which jobs are created. As Sharma writes: “In India, where hopes for the demographic dividend have also been sky high, ten million young people will enter the workforce each year over the next decade, but the lately the economy has been creating less than five million jobs annually.”

If this were to continue, there will be no demographic dividend for India.

The column originally appeared in the Vivek Kaul Diary on June 17, 2016

The Fallacy of Composition: Selling Equity, Buying Gold


Gold has done well in the recent past. Over the last six months it has given a return of around 14% (in dollar terms) and is currently quoting at $1250 per ounce (one troy ounce equals 31.1 grams).  With these returns gold is coming back on the investment radar, though over the last five years the yellow metal has given a negative return of 12%.

Indians have always been fascinated with the idea of buying gold. As per the World Gold Council the consumer demand for gold in 2015 stood at 848.9 tonnes. Of this 654.3 tonnes was gold that went towards making jewellery and 194.6 tonnes was gold that went towards making bars and coins.

Interestingly, India now lags behind China when it comes to gold consumption. In 2015, Chinese consumer demand for gold stood at 984.5 tonnes, around 16% more than Indian demand. The Chinese consumed more gold than India both when it comes to jewellery as well as gold in the form of bars and coins.

The trouble in the Indian case is that the country produces very little gold of its own. In 2015, the domestic supply of gold in India, as per estimates made by the World Gold Council stood at 9.2 tonnes or a little over 1% of total consumer demand. This supply came from local mine production, recovery from imported copper concentrates and disinvestment.

What this means is that India imports a bulk of its gold demand. As Akhilesh Tilotia of Kotak Institutional Equities who is also the author of The Making of India writes in a recent research note titled Selling Equity for Gold: “On net basis, i.e. accounting for the gold which is imported for re-export, Indians bought US$267 billion of gold over the past decade.”

The gold that is imported into India needs to be paid for in dollars. India’s stock of dollars comes in from various things including foreign direct investment(FDI) made into companies and projects and foreign portfolio investment(FPI) made into stocks and bonds.

As Tilotia writes: “According to our calculations, FPIs own a quarter of the outstanding stock of the BSE-200 stocks as of 2QFY16. Over the past decade, India received net equity FII flows of US$119 bn; the net FDI inflow is US$185 billion.”

If we add the FPI and FDI numbers for the last decade it comes to $304 billion. As mentioned earlier India net-imported gold worth $267 billion over the last decade. This essentially means that a bulk of the dollars that came into India through the FDI and the FPI route where used to buy up gold.

As Tilotia writes: “Indians have, over the last decade, traded equity in their private and public companies for gold. Of the US$304 billion that came in as net FDI and FII inflows over the last decade (FY2007-16E), Indians bought gold worth US$267 billion.”

To put it simply, over the years, India has sold stocks to earn dollars and in turn used these dollars to buy gold. While this wasn’t planned, this is how things have turned out. In the process, the country has become a victim of the fallacy of composition.

As Greg IP writes Foolproof—Why Safety Can Be Dangerous and How Danger Makes Us Safe: “This fallacy occurs when what benefits an individual is wrongly assumed to benefit an entire group. For example, if one moviegoer stands, he can see the show better. But if everyone in the audience stands, no one sees better, and everyone is uncomfortable.”

Indians buying gold is a tad like that. When an individual Indian buys gold either as jewellery or as an investment or as a hedge against inflation, it makes sense for him at individual level. But when the same thing happens at a societal level, it creates problems for the country.

Buying gold needs dollars, which can’t be created out of thin air. Further, it can also lead to the value of the rupee against the dollar falling as had happened between May and August 2013, when the dollars coming into India dried up, but Indians still continued to buy gold. As Tilotia writes: “when foreign fund flows dried up, Indians continued to buy gold thereby precipitating worries of large slippages on the current account deficit.”

It also led to the demand for dollars going up leading to the rupee depreciating against the dollar. This led to the value one dollar nearly touching Rs 70. This became a huge problem given that oil imports suddenly became very expensive as Indian oil marketing companies had to pay more in rupees in order to buy dollars they required to buy oil. The demand of oil companies for dollars led to further depreciation of the rupee against the dollar.

Further, these were the days when diesel was subsidised by the government. The government in turn compensated the oil marketing companies for the under-recoveries they occurred. This pushed up the government expenditure as well as the fiscal deficit. The fiscal deficit is the difference between what a government earns and what it spends.

Of course, every time someone buys gold, it takes away money from another productive investment. Gold essentially is useful because it is useless.

All this was an impact of the fallacy of composition which came with Indians buying gold. The government is now trying to address this fascination that we have for gold through the gold monetisation scheme and the sovereign gold bonds. Let’s see how successful they are with it.

The column originally appeared on Vivek Kaul’s Diary on March 11, 2016

All Things Considered, The Mumbai-Ahmedabad Bullet Train Is Still A Good Idea

This column is essentially a follow up to the column titled In Defence Of The Mumbai-Ahmedabad Bullet Train which was published a few days back. In this column I will try and answer some questions that were asked by readers in response to the previous column.

One feedback that came through very strongly was that the Modi government has got its priorities all wrong and the bullet train is essentially a show-off project. This was very well summarised in a tweet in which I was asked whether I had ever tried taking a local train at the Parel station (one of the local train stations in Mumbai on the central line) in the evening? The short answer is yes, I have boarded local trains at Parel in the evening and at various other stations in Mumbai. And it’s a pain.

The point that the reader was trying to make was that taking the local train in Mumbai in the evenings (and the mornings) is very difficult. The trains are usually all packed and there is very little space to even stand properly. There are many more people packed into the compartments than these compartments are built to take in.

In fact, today’s edition of the Mumbai Mirror newspaper reports that ventilators on 80% of the trains don’t work. As the newspaper reports: “Over 400 commuters have died of heart attacks and other complications this year, triggered in most cases by suffocation. A majority of these deaths took place during peak hours.”

Long story short—forget standing properly, you can’t even breathe properly while traveling on a Mumbai local. Given this scenario, why are we interested in starting a bullet train between Mumbai and Ahmedabad? Why not use that money to try and improve the condition of the local trains in Mumbai? Has the government got its priorities all wrong?

This is a fair question. Nevertheless, it needs to be understood that we are not in an either-or kind of situation here. Most of the money to build the bullet train system between Mumbai and Ahmedabad is not coming from the current revenues of the Indian government or the Indian Railways for that matter. This means that the money is not being taken away from something else that the government could have done with that money.

This, further means that the money that will be used for the bullet train between Mumbai and Ahmedabad could not have been used to improve the local train system in Mumbai. It could not have been used for increasing the education, health, environment and road and highways budget of the government as well. It was available only for the bullet train.

So where is the money to build the bullet train going to come from? This money is being lent by the Japanese government at a highly concessional interest rate of 0.1% per year to be repaid over a period of 65 years (Yes, you read that right).

Why is the Japanese government lending this money at close to 0% interest? They are lending this money so that the Japanese Shinkansen Technology is adopted for the bullet train project. This is in the interest of the Japanese business which is currently going through a tough time. So the Japanese government is lending money to the Indian government to buy stuff from Japan. This money is not available for anything else.

Further, as the press release announcing the bullet train said: “Japan has offered an assistance of over Rs 79,000 crore for the project. The loan is for a period of 50 years with a moratorium of 15 years, at an interest rate of 0.1 per cent. The project is a 508 kilometer railway line costing a total of Rs. 97,636 crore, to be implemented in a period of seven years.”

So 80% of the money to build the bullet train line is coming from Japan. This loan comes with an interest rate of 0.1%, which more or less means that this is an interest free loan. It is to be repaid effectively over a period of 65 years. The loan comes with a moratorium of 15 years, which means that the repayment does not have to start immediately. It will start in 15 years time and will be repaid over a period of 50 years after that.

Given the long repayment period of the loan, the impact of inflation on the “real” value of the loan needs to be taken into account? As an editorial published in the Business Standard newspaper today (December 16, 2015) points out: “India’s average wholesale price inflation in the four decades between 1970 and 2010 has hovered at 7.6 per cent and consumer price inflation in that period has been estimated at an average of over eight per cent.”

At an inflation of 8% per year, by the time the loan repayment starts fifteen years down the line, the “real” value of the Rs 79,000 crore loan, in today’s money, would be around Rs 24,900 crore. At 5% inflation it would be Rs 38,000 crore. The broader point is that by the time the loan repayment will start the real value of the loan will be considerably lower.

This calculation does not take into account the fact that the loan will most likely be in Japanese yen. It does not take the currency risk into account. Currency risk is important because if the rupee depreciates against the yen, then the Indian government will need more rupees to buy the yen that it will need to repay the loan.

This was another feedback that I got in response to the last column. I was told that I did not take currency risk into account while putting forward my analysis. I did not do that because over a long period of time (65 years in this case), I think it won’t really matter.

In October 1996, one yen was worth 0.4 rupees (or 40 India paisa). Currently one yen is worth 0.55 rupees (or 55 Indian paisa). Since 1996, the worst situation came in August 2013(when rupee was rapidly losing value against the dollar as well) when one yen was worth around 0.69 rupees (or 69 paisa). Over the last twenty years, the general trend has been of the rupee depreciating against the yen except in the late 1990s when the rupee appreciated against the yen.

There have been periods of volatility where the rupee has rapidly depreciated against the yen, but over a two-decade period, the depreciation has happened at a very slow rate. Given this, even if the rupee were to continue to depreciate against the yen, it won’t really matter over a period of 65 years, especially once we take inflation and economic growth into account. The size of the loan by the time the Indian government starts repaying it, will be significantly smaller in comparison to the size of the economy as measured by the gross domestic product.

Another question asked by readers was that why is the train being started between Mumbai and Ahmedabad, which already has good connectivity? Given the nature of the project the train has to be run between Delhi and some place or Mumbai and some place (or Bangalore and Chennai). That is where the initial market of people likely to use the bullet train is, given that these cities have the highest number of air-travellers.

And given that among all India cities, Delhi tends to get the most money when it comes to building physical infrastructure, linking Mumbai with Ahmedabad makes immense sense. In fact, if the government has plans of a second bullet train, it needs to be between Bangalore and Chennai.

As far as the financing of the bullet train project is concerned, I don’t see any problems. The major problems will come in the implementation part. Getting the land required to build the track at a reasonable price and ensuring that the tickets are priced at a level, where the entire thing is viable and doesn’t just become a show-off project. That is where the real challenge is.

(Vivek Kaul is the author of the Easy Money trilogy. He can be reached at [email protected])

The column originally appeared on Huff Post India on December 16, 2015

In Defence Of The Mumbai-Ahmedabad Bullet Train



Over the last few days a lot of analysis has appeared in the digital media which has tried to project that the decision to launch a bullet train between Mumbai and Ahmedabad is a stupid one.

And this is how some of this analysis goes. India will spend Rs 98,000 crore on building thie bullet train between Mumbai and Ahemdabad. This is something it cannot afford. Now compare this to the amount of money that we spend on education, health, roads, etc., during the course of the year.

For the current financial year, 2015-2016, the allocation towards school education and literacy is at Rs 39,038.50 crore. The allocation towards higher education is Rs 15,855.26 crore. When it comes to health, the government has allocated Rs 24,549 crore to be spent during the course of the year. The allocation to the National Highways Authority of India which builds roads connecting the country is Rs 22,920.09 crore. The total allocation to the ministry of road transport and highways is at Rs 42,912.65 crore.

Further, during the course of the year, the Railways plans to spend just Rs 6,581 crore on 970 overbridges and under-bridges and other safety related measures, in order to eliminate 3438 level crossings. And if all this wasn’t enough the total allocation to the ministry of environment, forests & climate change is just Rs 1,446.60 crore.

Given the amounts that we are spending on such very important things how can we be spending Rs 98,000 crore on a bullet train. Can we really afford this?

As a recent analysis on points out: “The Mumbai-Ahmedabad bullet train budget is also 2.3X the entire spend of the Centre on schools. The corresponding figure for health and highways is 3.3 and 2.3, respectively.” [My numbers lead to slightly different ratios, but the broader point the Scroll article is trying to make doesn’t really change, so we will leave it at that].

If we look at the entire issue on the basis of the information that I have provided in the article up until now, spending money on a bullet train, when there isn’t enough money going around for health, education, roads and railway safety, seems out rightly stupid.

Nevertheless, all such analysis that has appeared in the media is essentially simplistic in nature. Allow me to elaborate. As the press release on the bullet train announcement points out: “India and Japan have signed an MoU [memorandum of understanding] on 12th December, 2015 on cooperation and assistance in the Mumbai – Ahmedabad High Speed Rail Project (referred by many as Bullet Train project). Japan has offered an assistance of over Rs 79,000 crore for the project. The loan is for a period of 50 years with a moratorium of 15 years, at an interest rate of 0.1 per cent. The project is a 508 kilometer railway line costing a total of Rs. 97,636 crore, to be implemented in a period of seven years.”

The bullet train between Mumbai and Ahmedabad will cost Rs 97,636 crore and will be built over seven years. Hence, the entire Rs 98,000 crore(approximately) will not be spent in one year. Given this, the comparisons with the health budget, the education budget, the road and highways budget, that have appeared in the media, are incorrect. A spending to be carried out over a period of seven years is being compared with spending carried out every year. A comparison of both over a seven-year period would have been the right way to go about it. But then things don’t look as bad as they do now.

It has been implied that the government is spending this money in one year, which it clearly isn’t. Second, the analysts forget to mention, perhaps unknowingly, that almost 80% of the project is being financed on a very soft loan from Japan.

Japan has offered a loan more than Rs 79,000 crore to be repaid over 50 years at an interest rate of 0.1% per year [Yes you read that right!]. Further, the loan comes with a 15-year moratorium. What this means is that India does not need to start repaying the loan immediately. It will have to do so fifteen years down the line.

Now what would repaying the loan entail? A loan at an interest 0.1% to be repaid over 50 years essentially means almost no interest is being charged. Once India starts repaying the loan, it would have to pay an EMI of Rs 135 crore per month. In fact, the interest is so low that the total repayment over 50 years will amount to just Rs 81,000 crore. This means an interest component of Rs 2000 crore over fifty years. The government of India can clearly afford this.

Also, this repayment doesn’t start for 15 years and has to be repaid over a period of 50 years. Hence, once we take inflation into account, the Rs 135 crore that will have to repaid 15 years down the line and over a period of 50 years, will be worth much less than it currently is. By then, the project will also start generating some revenue.

The question is why is Japan doing this? It “has been agreed that Shinkansen Technology will be adopted for the project.” In effect, the Japanese government is giving a loan to the Indian government at almost 0% interest, in order to be able to buy technology from Japanese companies.

Also, there is another reason for the Japanese largesse. As Bharat Karnad writes in Why India is Not a Great Power (Yet): “With an eye firmly on China as the main adversary and security challenge, India can synergize its engagement and role with the military, political, and economic capabilities of countries feeling threatened by Beijing to keep China at bay.”

Once these factors are taken into account the bullet train project between Mumbai and Ahmedabad will not be a drain on the government finances. Having said that the government will have to ensure that it does not become a “white elephant” as and when it starts. In order to ensure that the ticket prices of the bullet train will have to be lower than that charged by airlines.

(Vivek Kaul is the author of the Easy Money trilogy. He tweets @kaul_vivek)
The column appeared on Huffington Post India on December 14, 2015


11 reasons why India growing at 7.4% is simply not believable


Data released by the ministry of statistics and programme implementation shows that India’s gross domestic product (GDP), a measure of the size of the economy, grew by 7.4% during the period between July to September 2015. These are fantastic numbers in a world where real economic growth is slowing down. Even China is finding it tough to grow at rates that it did in the past.

So what is driving India’s economy? Manufacturing grew by a 9.3%. Trade, hotel, transport, communication & services related to broadcasting grew by 10.6%.

And financial, insurance, real estate and professional services grew by 9.7%. These three segments which formed 62.6% of the total economy between July to September 2014, helped the economy grow by 7.4%. Agricultural, forestry and fishing grew by just 2.2%.

The question is how believable is this growth of 7.4%? The short answer is—not very. It is worth mentioning here that GDP is ultimately a theoretical construct.

Most real economic numbers suggest otherwise.

Let’s take a look at them one by one.

1) Exports have been falling eleven months in a row. In fact, between April and October 2015, exports have fallen by 17.6% to $154.29 billion, in comparison to the same period last year. Between April and October 2014, the exports had stood at $187.29 billion. A greater than 7% economic growth rate with falling exports is a little difficult to believe.

2) Corporate profitability continues to remain subdued. As a recent news-report in the Business Standard points out regarding the profitability for the period July to September 2015: “It was another muted quarter for India Inc, with aggregate profit growth at both the operating and net level growing at only under one per cent over a year-ago period. The sample is of 2,300 companies…The numbers are worse for the benchmark indices such as the Nifty, where operating and net profit are down between three-five per cent over the year-ago quarter, with aggregate numbers below expectations.”

3) Passenger vehicles sales, another good measure of economic recovery, have been subdued through most of this financial year, though there has been some recovery in October 2015, which doesn’t come under the July to September 2015 period, for which the economic growth number has been reported. Between September 2015 and September 2014, passenger vehicles sales went up by only 3.85%.

4) Motorcycle sales, a very good economic indicator in the Indian context, have fallen for most of the financial year, only to have recovered a little in October due to festival season sales. It remains to be seen whether the sales can be sustained for November 2015. Data from the Society of Indian Automobile Manufacturers (Siam) points out that motorcycle sales during the first six months of the year (April to September 2015) were down by 4.06% to 5.36 million units, in comparison to the same period last year.

5) Tractor sales have been falling for thirteen months in a row. Data from the Tractor Manufacturers Association shows that sales have fallen by 20% during the first six months of this financial year (i.e. April to September 2015). This is a clear example of weak agricultural growth.

6) The loan growth of banks continues to remain subdued. The sectoral deployment of credit data released by the Reserve Bank of India (RBI) shows that bank loans grew by 8.4% between September 2014 and September 2015. In fact, they grew by an even slower 8.1% between October 2014 and October 2015.

7) Along with this, the bad loans of banks continue to pile up. As a recent report in The Indian Express points out: “Already burdened by bad loans, 37 banks, led by public sector ones, have reported a 26.8 per cent rise in non-performing assets (NPAs) over the 12-month period ending September this year.”
The overall non-performing assets of banks as of September 2015 stood at Rs 3,36,685 crore. This was an increase of Rs 71,000 crore, according to numbers put together by credit rating firm CARE.

8) The number of stalled industrial projects went up during the period July to September 2015. As a recent research note by Morgan Stanley points out: “The stock of stalled projects climbed in the September quarter, while existing capacity is being underutilized. This has, not surprisingly, lowered interest in greenfield investments, with industrial credit loan growth stagnating in single-digits.” The bulk of the stalled projects belong to the manufacturing and infrastructure sectors. Further, there is a good anecdotal evidence to suggest that small and medium enterprises, a major source of job growth, continue to struggle.

9) The Reserve Bank of India governor Raghuram Rajan recently pointed out that factories were running 30% below capacity as of now. A research report by DBS points out that the capacity utilisation rate was at 80% in 2011-2012. This suggests a significant slack in the economy. How is manufacturing then growing by 9%, as suggested by the data released by the ministry of statistics and programme implementation?

10) The real estate sector, a major employer of people, continues to be in the doldrums, with new launches coming down and the number of unsold homes going up.

11) Further, for two years in a row India has had a deficient monsoon. In its end of season report, the India Meteorological Department (IMD), the nation’s weather forecaster, stated that rainfall over the country as a whole was 86% of its long period average (LPA). Thus years 2014 & 2015 was the fourth case of two consecutive all India deficient monsoon years during the last 115 years.”

IMD uses rainfall data for the last 50 years to come up with the long period average. If the rainfall is between 96% and 104% of the 50 year average, then it is categorised as normal. If it is between 90% and 96% of the 50 year average is categorised as below-normal. And anything below 90% is categorised as deficient.

If something has happened only four times in 115 years, there is clearly reason to worry, given that nearly half of India’s population is dependent on agriculture. Also, this has clearly slowed down consumer demand in much of rural India.

On the positive side a lot has been written on the 36% jump in indirect tax collections. This has been offered as an example of a revival in economic activity.

Nevertheless, much of this huge jump has come from the government increasing the excise duty on petrol and diesel and capturing much of the fall in oil prices. Excise duty collections have jumped by 68.6% during the course of this financial year.

In fact as a recent ministry of finance press release points out: “These collections reflect in part increase due to additional measures taken by the Government from time to time, including the excise increases on diesel and petrol, the increase in clean energy cess, the withdrawal of exemptions for motor vehicles, capital goods and consumer durables, and from June 2015, the increase in Service Tax rates from 12.36% to 14%. However, stripped of all these additional measures, indirect tax collections increased by 11.6% during April-October 2015 as compared to April-October 2014.”

As the Chief Economic Adviser Arvind Subramanian recently said in an interview: “Even if you take away all the new things, new taxes have been added, that number[indirect taxes number] is growing at a robust about 11.5 -12% and if that number is right, that means that the underlined economy is recovering.”

There are few other data points on the positive side. The commercial vehicle sales have been robust during the first six months of the financial year. At the same time consumption of petroleum products has also gone up by 8.5% between April and Septmber 2015.

While the underlying economy might be recovering, it is very difficult to believe that it is growing at 7.4%. In fact, Subramanian and Rajan suggested the same in a very roundabout sort of way in a recent joint interview to a television channel.

To conclude, once you take all the factors I have listed above into account, the economic growth (or GDP growth) number of 7.4%, doesn’t look believable at all.

(Vivek Kaul is the author of the Easy Money trilogy. He tweets @kaul_vivek)

(The column was originally published on Firstpost on December 1, 2015)