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GDP in 2015-16 to be 8-8.5%; double-digit growth soon, says FM

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Arun Jaitley

New Delhi: Finance Minister Arun Jaitley today said growth in the next financial year will rise to 8-8.5 per cent and clock double-digit level in the subsequent years.

“Growth in 2015-16 is expected to be between 8-8.5 per cent. Aiming for a double digit rate seems feasible very soon,” he said while presenting the Budget for 2015-16 in the Lok Sabha.

The Central Statistical Organisation (CSO) has recently revised the base year for calculation of GDP growth to 2011-12. As per this, the economic growth rate in 2013-14 is estimated at 6.9 per cent and for 2014-15 at 7.4 per cent.

The Economic Survey had yesterday said that growth will receive a boost from the cumulative impact of reforms, lower oil prices, likely monetary policy easing facilitated by lower inflation, and forecasts of a normal monsoon in 2015-16.

The government headed by Prime Minister Narendra Modi, which assumed power in May last year, has initiated a slew of economic reforms, including de-regulation of diesel prices, raising FDI caps in several sectors, and direct transfer of LPG subsidy to beneficiaries.

(PTI)

China just overtook the U.S as the World's largest Economy

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Photo: Reuters

Photo: Reuters

– by Mike Bird, Business Insider

Sorry, America. China just overtook the US to become the world’s largest economy, according to the International Monetary Fund.

Chris Giles at the Financial Times flagged up the change. He’d also alerted us back in April this year that it was all about to happen.

Basically, the method used by the IMF adjusts for purchasing power parity, explained here. The simple logic is that prices aren’t the same in each country: a shirt will cost you less in Shanghai than San Francisco, so it’s not entirely reasonable to compare countries without taking this into account. Though a typical person in China earns a lot less than the typical person in the US, simply converting a Chinese salary into dollars underestimates how much purchasing power that individual, and therefore that country, might have. The Economist’s Big Mac Index is a great example of these disparities.

So the IMF measures both GDP in market exchange terms, and in terms of purchasing power. On the purchasing power basis, China is overtaking the US right about now and becoming the world’s biggest economy.

We’ve just gone past that cross-over on the chart below, according to the IMF. By the end of 2014, China will make up 16.48% of the world’s purchasing-power adjusted GDP (or $17.632 trillion), and the US will make up just 16.28% (or $17.416 trillion):

IMF, Google Public Data Explorer

It’s not all sore news for the US. It’ll be some time yet until the lines cross over in raw terms, not adjusted for purchasing power. By that measure, China still sits more than $6.5 trillion lower than the US, and isn’t likely to overtake for quite some time:

IMF, Google Public Data Explorter

But in terms of the raw market value of China’s currency, it still has a long way to go.

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