Macro

PA Inflation Down To 14.59% - Feb 5, 2011

Inflation seems to be coming under control, quite dramatically. The latest data  for Feb 5, 2011 shows a 14.59% headline number. It will no doubt be revised to 16% or more later, when no one remembers.

China Beats The Next 10 In Steel, Added Up!

Data from the World Steel Organization for 2010 is in, and there's an incredible show out there. China, with 626 million tons of production, is greater than the next 10 countries,  added up.

India is fifth in the list, with 66.85 million tons.

World Steel Production, 2010

Jan 2011 Monthly Inflation at 8.23%

The Jan Inflation Number went back to 8.23% from the December number of 8.43%. This sounds very bullish but I think the data is crappy.

Monthly Jan WPI at 8.23%

IIP Growth at 1.55% for Dec 2010

The Index of Industrial Production showed a 1.55% growth over last year.

As usual, there were crazy revisions. November data which disappointed everyone with 2.7%, is now revised up to 3.62%. September is up to 4.9% from 4.4%. So this could just be a head fake, for all we know.

Primary Articles: Inflation down to 16.24%

From last week's 18.44%, the WPI release today for 29 Jan shows inflation at the Primary Articles level slowed down to 16.24%.

Inflation

Surjit Bhalla: Black Money in 2009=1 lakh crore

Mr. Bhalla says something interesting; that the amount of black money in the country is overrated. He complains that political parties that claim that 50% of India's GDP is our black economy; it's not that significant, he says. Here's his tax calculation.

Clearly, the study of black money is an important issue. And tax evaders have to be punished. My estimate of black money in India is based on private income tax collections and details about the calculation are contained in ‘Tax Compliance and Tax Rates’ (in the book, India on the Growth Turnpike, Essays in Honour of Vijay Kelkar). And how much might total black money be in India in 2009? Only about Rs 1 lakh crore, and given our GDP is Rs 60 lakh crore, that is about 1.5 per cent of GDP. These numbers are shockingly small and especially small compared to the GFI estimate which seems to be universally accepted. The GFI numbers imply a black money flow of 7.5 per cent of GDP every year, that is, each year black money equal to five times my estimate flows into the Indian economy. Both numbers cannot be right. Which of these two numbers are closer to the truth?

(The paper he mentions is here)

First, the wording choice is deliberate and I can understand why. Surjit doesn't say "How much total black money exists in India in 2009?" - he asks, how much of it was generated in 2009. Fine, let's go by that definition, but it doesn't change the assertion that 50% of India's GDP might exist as black money.

Short Take: Markets Crash From FII Selling?

At JagoInvestor recently, Manish wrote a post on whether there is a stock market crash on the way. Manish quoted me:

However, not everyone agrees to this argument. “FII’s have invested around 50,000 crores in Indian markets from the point when Nifty was around 5,400 last time, which was around Aug 2010,  However FII’s have sold taken out just 15% of what they invested, and right now we are at the same levels , so still lot of FII’s money is lying around.

So, the biggest reason for the fall is the fear of rising inflation and interest rates and the way it will affect our markets and economy in coming days”- says Deepak Shenoy of Capitalmind.in .

I thought I would clarify - and perhaps the best way I know is through video at MarketVision's Short Takes. Here's a five minute short take on the subject - Is FII Selling Responsible for the Market Crash.

Markets Crash From FII Selling?

Are FIIs responsible for the recent fall in Indian markets? Deepak Shenoy takes a long, hard look at the data - FIIs have bought over 40,000 crores since September, when we were last at 5400 on the Nifty - and in the last month, sold just 9000 crores.

This means FII selling can't be the reason - or at least, not the primary reason for a 15% crash.

Finally, what else it could be.

Please leave your comments, much appreciated!

PA Inflation at 18.44% for Jan 22

The Primary Articles Inflation has now perked up again, going to 18.44% on 22 Jan 2011, up from the 17.26% reported last week.

Primary Articles Inflation

We're in for some serious headline inflation in the next month or so because last year was benign in Jan/Feb. (Although that "benign" was above 20%!)

PMI grows in Jan as well

Markit has released data on both the Manufacturing and Composite Purchase Managers' Index for Jan. They came in at 56.8 and  59.6 respectively.

HSBC India Manufacturing PMI HSBC India Composite Output PMI