K V SubramanianCompte certifié

"Manufacturing companies assessed further strengthening of production, order books and employment.” Improvement in corporate payments (RTGS) with Dec showing +ve YoY growth vs -ve in prior 15months @narendramodi @PMOIndia @nsitharaman @nsitharamanoffc @FinMinIndia @PIB_India(4/4)

Macquarie Research: CEIC’s seasonally adjusted indicator for investment reached 20-yr high in Jan. Composite PMI expanded MoM to 56 in Jan. RBI’s Business Expectations survey in expansionary zone @narendramodi @PMOIndia @nsitharaman @nsitharamanoffc @FinMinIndia @PIB_India (3/4)

#EcoSurvey2019 showed in every country that grew at 5%+ for over a decade, virtuous cycle proceeds as investment→growth→jobs→consumption. So, expect growth, employment, & consumption to follow @narendramodi @PMOIndia @nsitharaman @nsitharamanoffc @FinMinIndia @PIB_India (2/4)

Investment sentiment at 20-yr high while consumer sentiment & employment lag. As #EcoSurvey2019 showed, "virtuous cycle" starts with private investment... growth, employment & consumption follow @narendramodi @PMOIndia @nsitharaman @nsitharamanoffc @FinMinIndia @PIB_India (1/4)

India needs more passionate researchers like Prof. Mittra. Kudos to your passion to make a difference to the world Prof. Mitrahttps://twitter.com/letsgrowmoney/status/1365860568800714755 …

PLFS employment data (produced by NSSO using rigorous methodology) passes smell test as PLFS employment correlates positively with GDP (0.84) and is consistent with Okun's law. PLFS infra needs to be upgraded so that monthly employment data can be generated without lags (2/2)

Of course @dravirmani ...unlike tax cuts whose effects are more transient, tax reforms generate benefits that last over a long-time several years... for the multiplier to apply, according to PIH, estimated lifetime income of households has to change to increase aggregate demandhttps://twitter.com/dravirmani/status/1364461623843323904 …

Of course @DrVirmani... unlike tax cuts whose effects are more transient, tax reforms generate benefits that last over a long-time several years... for the multiplier to apply, according to PIH, estimated lifetime income of households has to change to increase aggregate demandhttps://twitter.com/dravirmani/status/1364461623843323904 …

3b) As argued in Ch 4 of Survey, growth generates resources for programmes to achieve distributional equality. So govt capex in recessions & downturns → growth → money for welfare programs → (ceteris paribus) better distributional equality. (10/10)

3a) “The philosophy of the Economic Survey, on the other hand, appears to be that expenditure causes growth, rather than distributional equality.” This is indeed the philosophy of the Economic Survey. (9/10)

2e) Tax cuts, including indirect taxes such as excise duties, are in essence revex while investing in infrastructure, health, and education are effectively capex. Survey recommended and Budget implemented enhanced capex. So, no contradiction there. (8/10)

2d) So, when govt borrows to do capex, the growth the economy gets is much higher, thereby the (i-g) differential is much more negative and thereby debt becomes sustainable as shown in Eco Survey Ch 2. (7/10)

2c) In simple terms, when govt spends Rs 100 as capex, Rs 245 gets added to the economy in that year itself and Rs 480 gets added over a few years. But, when Rs 100 is spent on revex, only Rs 98 gets added to the economy… so Rs 2 gets wasted when it is done as revex. (6/10)

2b) Research by NIPFP shows that multipliers for capex are about 4.8 in India & 2.45 in the year when capex is done. In contrast, revex multiplier is 0.98. (5/10)

2a) To understand that there is no contradiction, crucial to understand that all expenditure by govt are not the same. Economic growth from govt capital expenditure (capex) is much higher than that from govt revenue expenditure (revex). (4/10)

1c) Also, debt sustainability depends not on (i-g) differential for one year but over several years in the future. As Survey shows clearly, for FY22 onwards, (i-g) should be negative as has been the norm for India since 1990s. (3/10)

1b) Debt sustainability from borrowing for Capex in FY22 & thereafter depends upon path of (i-g) differential from FY22 onwards & not that for FY21, which is the past. (2/10)