Chinese PMI and the mysterious belief in numbers

The Chinese official PMI climbed to 53.1 in March, reaching its best level in 12 months. In contrast, a report from HSBC/Markit put the index at 48.3 for March, the fifth straight month of decline. To control information from the microbloggers Chinese authorities have warned 3117 websites, punished 70 Internet companies, arrested 1,065 people and deleted 208,000 harmful messages

I was reading two stories recently. They were positioned right next to each other. Both stories were about China. One was about a specific data point issued by the Chinese government—the Purchasing Managers Index (PMI) for March. The other story was about a crackdown in China on microblog websites. The microblogs were shut down allegedly for spreading rumours about the purge of Bo Xilai, the controversial party secretary of Chongqing. Most investors, economists and analysts would dismiss any connection between economic information and political gossip. They would be wrong, because both stories were about something crucial to markets: information.

The PMI data was not interesting because it went higher or lower than the previous reading. It was interesting because the official information disagreed with information collected and analyzed by a private firm. Of course, the discrepancy was often ignored. Many analysts not only assumed that the information was correct, they went happily on to assume that it actually meant something. Some of the more cautious tried to explain it. The truly analytical tried to correlate and justify the two readings to prove that there was some logic in the differences.

The official PMI improved reaching its best level in 12 months. It climbed to 53.1 in March from 51.0 in February according to the China Federation of Logistics and Purchasing, which issues the data along with the National Bureau of Statistics. Above 50 is supposed to be an indication that the economy is expanding. In contrast, a final report from banking group HSBC and the London financial services consultants—Markit—put the index at 48.3 for March, down from 49.6 in February, the fifth straight month of readings below 50.

Some analysts cheered the results. They simply ignored the private number and used the official number as an indication that the Chinese economy was clearly growing again. The much anticipated soft landing had been achieved. Even if we accept this analysis, one wonders if a growing Chinese economy might also grow more inflation especially since both food and energy prices remain quite high.

Other analysts had a more technical explanation. In past years the March data has shown a big upward bounce due to momentum from the Chinese New Year, which falls in January or February. However, this take on the data is not especially optimistic, because the average rise is over 3% well above this year’s numbers. If the HSBC/Markit numbers are correct then there really is trouble. Any landing won’t be soft.

Analysts also tried to explain away the differences. The private survey was supposed to be inaccurate because it covered small companies in the export business, while the government survey was distorted because of inadequate seasonal adjustment.

The reality is probably simpler. The government or at least their sources have a very strong incentive to publish optimistic figures, the private survey does not. There is reason to be suspicious. The private survey covered 430 companies with a 70% participation rate. The official survey covered 820 companies and their response rate was a perfect 100%. Also, while the Markit methodology is transparent, the government’s is not. The reality is that no one knows exactly what goes into the government survey and the government sees no reason to tell.

Even if we assume that the government is trying to paint an accurate picture, there is no reason to assume that their sources are. According to author and Wall Street Journal correspondent, Tom Orlik, one of the problems is a “recalcitrant sample set”. In short the statisticians are not lying, but the companies reporting to them are.

This is hardly surprising. The veracity of Chinese companies reports are supposed to be guaranteed by their association with international auditing firms. Of course, when the auditing firms discovered that the companies’ books had often been cooked, they resigned. For example, in the past year Deloitte alone has dumped Boshiwa, Longtop and Daquing. The problem is probably going to get worse as the annual reports come due on 30th April.

Other reports from China are also suspect. A US consultancy determined last year that the Chinese under-report steel production of 45 million tonnes about the same as Germany’s total production. The under-reporting was due to the government’s demand to curb production.

Controlling information is the dream of every politician and CEO. The difference is that the Chinese can do it. To control the information from the microbloggers they have warned 3117 websites, punished 70 Internet companies, arrested 1,065 people and deleted 208,000 harmful messages.

The fact that a government’s attempt to control information creates bad information for both the government and everyone else is hardly surprising. What is surprising is the fact that Wall Street’s economists, analysts and pundits actually give it credence. The Chinese are only acting according to their perceived economic incentives. The motivation of investors is less clear.

(William Gamble is president of Emerging Market Strategies. An international lawyer and economist, he developed his theories beginning with his first hand experience and business dealings in the Russia starting in 1993. Mr Gamble holds two graduate law degrees. He was educated at Institute D'Etudes Politique, Trinity College, University of Miami School of Law, and University of Virginia Darden Graduate School of Business Administration. He was a member of the bar in three states, over four different federal courts and has spoken four languages. Mr Gamble can be contacted at [email protected] or [email protected]).


Public Interest Exclusive
Making the Railways friendly for the disabled –Part I

If public transport system is not catering to the needs of disabled, their livelihood is being denied. It is of utmost importance that the Disability Act 1995 is implemented in letter and spirit

As a follow up to “Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act 1995”, Government of India through Central Public Works Department (CPWD) as well as Indian Railways through Research Designs Standards Organisation (RDSO) independently prepared guidelines to make their respective built environment accessible to Persons with Disability (PwD) i.e. make them barrier free. This was done in 1998. The CPWD’s 85 page guidelines are more comprehensive than the RDSO Guidelines of 24 pages. In the US, 257 pages design standards emerged as a follow-up to the American Disability Act 1990, revised as recently as 2010 and in 2007, United Nations brought out its 31 Chapters long guidelines, which at present are undergoing revision.

It needs to be emphasized that these are only guidelines. Ultimately, detail pertaining to specific local conditions will determine how best the built environment is made barrier free.

There is one more document that needs to be followed which actually determines the engineering of Railway operations. This is the Indian Railways Schedule of Dimensions (IR-SOD). The IR-SOD first came about in 1913 and has been undergoing revisions over the years to meet technological changes as well as to manage with transitional requirements. The latest revision was made in 2004 and will be referred to herein as IR-SOD2004. This, however, does not include certain dimensions that need to go along with the “new age” rakes being used on Mumbai suburban section. It is also recognized at the outset that, although most railway station infrastructure, especially related to passenger platform, are for exclusively for the suburban services, some platforms do cater to the non-suburban passenger services as well. Imposition of specifications of infrastructure for non-suburban passenger services onto the exclusively suburban passenger services needs to be relooked by the concerned authorities like RDSO and the Railway Board as these are causing hardship to nearly 75 lakh daily commuters of Mumbai suburban Railway system.

If Indian Railways is to be Barrier Free i.e. Accessible to PwD, the details to be followed should be, to begin with, the Railway Guidelines. However, it should adopt those practices which will provide practical solutions as suggested in the CPWD, ADA or the UN Guidelines or even innovate and get RDSO to confirm its workability. One such innovation in this regard is to relocate the compartment for PwD in the train formation. The other being the manner of raising platform level to minimize mainly the wide vertical and also the horizontal gaps presently seen at most stations.

Let us understand that what is relevant here is safe mobility for all, specifically to PwD. For a visually impaired person, guiding blocks of tactile tiles laid appropriately is very useful. The “raised bar” or “corduroy” type for guiding direction of movement and “raised truncated hemispheres” type which acts as warning of a change, hence acts as stop and proceed sign. These “directional tiles” and the “warning tiles” need to be laid to a plan with considerable thought behind it and not left even to a site engineer or to the tile layer as very often happen. One also should not use one type of tile for the other as has been observed.


RDSO specified location of providing “minimum 460 mm of guiding floor material at the edge” on Railway station platforms need to be corrected. While it is acceptable to specifically provide better non-skid tiles at the edge, it is outright dangerous to provide it as guiding floor as the suburban local services as well as non-suburban trains will practically be touching anyone on this edge strip, considering that passengers are not always within the compartments of even the non-suburban train services. With overcrowded coaches and commuters overhanging from doors in the suburban sections, it will definitely be very accident prone.

Even the CPWD specification giving 800 mm edge margin is not good with such overhanging commuters although persons standing just beyond the edge margin may just about be missing meeting with accidents.

Railways have been painting or laying a strip of tiles with contrasting colour to warn commuters of dangers of standing in the edge band of the platform, but this warning strip is not recognizable to the visually impaired commuter.

In addition to providing warning strip with “warning tactile tiles” at say 1000 mm from the edge, the right location of guiding “directional tactile tiles” would be along a path adjoining the staircases, leading visually impaired persons to the “waiting spot for PwD” where the compartment meant for PwD halts. Providing such a guiding row of tiles will also make other commuters get into habit of leaving the path unobstructed as far as possible, even during peak crowd.

The compartment meant for PwD currently have been placed adjoining the First Class compartment where relatively fewer crowd is expected. It is also found that the platform space available at these locations invariably narrow down, as these is where the staircases are located. Peak time crowd is not easily negotiable either. Being right there where the crowd is, normal commuters also throng into these compartments and deny most times the PwD access into these compartments and then their rightful seat.

Therefore, it is suggested that these be relocated to the extreme ends, just behind the Motorman’s cabin and in front of Guard Cabin. By doing so, boarding and alighting crowds from the currently neighbouring coaches will be absent, reducing danger and discomfort to them. By doing this, safe passage gets provided to PwD to reach the spot on the platform where the only set of commuters will be PwD, elderly, pregnant women, family with children, the infirm and those with temporary disability and those with arthritic ailments, eliminating most other crowd.

It is recognized that the passage to the waiting spot for PwD will be long and somewhat difficult to negotiate the peak period crowd, but this can be minimized by properly guiding the PwD right from the Foot Over Bridge (FOB).

The current location also brings in the possibility of the doorway of the compartment for the PwD not always halting in front of where the PwD currently wait for the train. Worse situation arises when the gap between two coaches meant for the buffers and couplings come right in front of this spot.

The suggested location not only addresses this problem but boarding and alighting will be under direct observation, but not responsibility, of the motorman or the guard, thereby unauthorized commuters entering these compartments would be under psychological control. Also, the guard and motorman will be able to get the train moving only when the PwD have fully and safely alighted or boarded the coach.

If medical first aid is provided to a victim of an accident within the ‘golden hour’, there is very good chance of saving victim’s life. A scheme has been proposed, if implemented, this medical first aid can be reached to the victim of an accident on the Mumbai Suburban Railway System within three minutes. Nearly 4000 fatalities occur on the suburban railway system annually.

For this scheme, a paramedic and a helper and their kit comprising of stretcher, a ladder and paramedic box need to be housed on every train. They can be accommodated in this compartment meant for PwD. The paramedic and the helper would ordinarily help the persons with disability and the elders to board and alight from the train. This help is needed mainly because the level of the coach floor many times is as high as 585 mm (~23”) from the platform level; most times it is 300 mm to 400 mm (12” to 16”) although there are many cases where the level difference is as low as 100 mm (4”). Until the accidents reduce and level differences are minimized or eliminated, the need for having the paramedic and the helper will remain. Locating the compartment at the extremity of the 12 coach trains would prove to be very useful, although there would be stray platforms where platforms become quite narrow towards the ends. But then, with only PwD, the number of commuters there would also be very much less than what is seen now.

In the second and concluding part, we will see the issue of large level differences between the coach floor levels and Platform levels and how it can be tackled.

(Sudhir Badami is a civil engineer and transportation analyst. He is on Government of Maharashtra’s Steering Committee on BRTS for Mumbai and Mumbai Metropolitan Region Development Authority’s Technical Advisory Committee on BRTS for Mumbai. He is also member of Research & MIS Committee of Unified Mumbai Metropolitan Transport Authority. He was member of Bombay High Court appointed erstwhile Road Monitoring Committee (2006-07). He is member of the Committee Constituted by the Bombay High Court for making the Railways, especially the Suburban Railways System Friendly towards Persons with Disability. While he has been an active campaigner against noise for more than a decade, he is a strong believer in functioning democracy. Mr Badami can be contacted at [email protected])



Mahesh Chandrasekar

5 years ago

I read with interest your article on - Making the Railways friendly for the disabled – Part I

I use a wheelchair and as part of my work I have to travel to different parts of the country and I have to travel by train quite often.

I dread travelling by trains as they are highly unsafe, there are no provisions/ considerations for persons with disabilities and persons with reduced mobility. We are just left to the elements to fend for ourselves. In reality passengers with disabilities and with reduced mobility could easily account for at least 40% of all the passengers.

If I go by what the Railways are currently offering to passengers with disabilities and reduced mobility - I can safely conclude that the standards, designs and solutions that have been proposed/ implemented for persons with disabilities and reduced mobility by the Research Designs Standards Organisation (RDSO) and Indian Railways Schedule of Dimensions (IR-SOD) are pretty outdated. I would like to point out that some of these ideas/ concepts have also been reflected in your article - for example the concept of exclusive compartment for the disabled.

As a person with disability, I prefer to and have the right travel along with my family and colleagues (and not in an isolated coach). I have the right to choose the different class (First/ Second/ Chair Car) offered by the Railways. I should also be able to book my tickets using my 'Rail Travel Concession' through the internet. I should be able to enter and exit the coach, use the washroom like any other passengers. I have the right to be provided with appropriate support by the Railways in order to travel safely and with dignity.

I would like to know the measures taken by the railways to consult persons with disabilities and reduced mobility during the design, operation and maintenance. Is there a plan/ time frame to make the end-to-end travel by the railways safe and conducive; Who is accountable for the safety and concerns of people with disabilities and reduced mobility? I hope the Railways do not create an exclusive authority to fulfill this need.

In addtion to the Persons with Disabilities Act, 1995 (that you have mentioned in your article), India has signed (on 30th Mar 2007) and ratified the Convention on the Rights of Persons with Disabilities on 1st October 2007. Accordingly India is bound to fulfill its obligations mentioned in this Convention. In specific Article 3 - refers to the General Principles and Article 9 on Accessibility - elaborates the Rights and Action points for the State Parties (India).

I am glad that through your article you have highlighted the needs and concerns of persons with disabiliites. I can assure you that there are a number of persons with disabilities and Disabled People's Organisatons across India who are interested and would be ready to be part of an initiative to make the Railways friendly to persons with disabilities and reduced mobility. I am sure that their experiences and suggestions would be suitable compensated as well.

Mahesh Chandrasekar



In Reply to Mahesh Chandrasekar 5 years ago

Mahesh Chandrasekar has responded to the article quite elaborately. I shall respond to it after I get few more responses from readers. However one thing I seem to have missed out is to mention that most of what I have presented in the article pertains to Mumbai's Suburban Rail System where the coaches, platforms, FOBs and staircases are exceedingly overloaded. The issues for non-suburban system are slightly different and can be tackled relatively with ease primarily because of the train halt time is long in comparison to the suburban train service.

Economy & Nation Exclusive
Coal India will continue to be a victim of conflicting ideologies - Part I

The government has listed Coal India to raise money but has pushed CIL into a conflict between its role as a company that is fully accountable to its shareholders and its role as a PSU with all the associated national and social obligations

When Mohan Kumaramangalam nationalised 937 private coal mines in the country in 1972 and 1973, his intention was to put an end to unscientific ‘slaughter ‘mining practices, ensure the safety and the welfare of the miners, channel public investment on a large-scale into coal mining and facilitate integrated planning of coal development. In 1975, CIL was created as a 100% public sector undertaking (PSU), as a holding company, to fulfil this vision. CIL has indeed measured up to this expectation by guiding its subsidiaries in developing both coking and non-coking coal mines in a scientific manner. 

Its systematic exploration effort has made it possible for the company to establish around 22 billion tonnes of extractable coal reserves. It has a well-trained, dedicated work force of a little less than 0.4 million, producing 430 million tonnes of coal annually to fuel most of the country’s electricity generation and other vital industries. As one of the largest coal companies in the world with invaluable assets, CIL now attracts huge investments, both domestic and foreign. In view of these achievements, the central government has conferred on it the status of a ‘Maharatna’ company with increased freedom to take autonomous decisions on expanding its operations, both domestic and global. The Maharatna status also mandated CIL to open up its shareholding to the public and get listed in the stock market. 

CIL went in for an Initial Public Offering (IPO) in October 2010, which became oversubscribed by more than 15 times. Both, domestic and the foreign investors, have an eye on India’s vast mineral resources, particularly coal, apart from deriving value from the organisational strengths of CIL. The company’s problems started soon after its successful IPO.

The IPO has changed CIL’s character as a PSU. With a 10% public shareholding in it, CIL is no longer a 100% government-owned company. Being listed in the stock market, the company is now subject to the rigorous norms of corporate governance. Its private shareholders are entitled to a share in the company’s profits in proportion to their shares. They can question the company’s decisions to the extent they affect their interests. On the other hand, CIL has several national obligations that are imposed on it by the majority shareholder, i.e. the government.

For example, CIL is obligated to sell its coal at the government-fixed subsidised prices to the electricity utilities, so as to enable the utilities in turn to subsidise the electricity sold to the farmers and the other consumers, as per the diktats of their respective owners, i.e. the states. 

Thus, if the Maharatna status has apparently liberated CIL from some governmental control, its primary role as the main supplier of coal to the electricity industry continues to constrict that freedom and neutralise it to a very large extent. 

During the last five to six years, the laissez faire policy of the present government has allowed the power ministry and the states to go berserk in allowing a large number of new merchant power projects. The environment ministry has bowed down to their wishes and rubber stamped, or is in the process of rubber stamping, 702,000 MW of thermal capacity, mostly based on coal. This is a mind boggling figure as it is six times the existing thermal capacity in the country and three times the capacity projected by the Planning Commission as the requirement up to 2031. CIL is expected to meet at least 70% of the coal needed by these new power projects. It can neither raise the huge financial resources needed for expanding its capacity so quickly nor upscale its physical capacity to such an extent, to cope with this challenge within such a limited time. If it seeks budgetary support from the government, it will have to forego its Maharatna status and along with it, whatever little commercial autonomy it has gained! If it does not, it will forego its role as the main coal supplier in the country, forcing India to become a net importer of coal. 

Incidentally, the coal rush described above has also led to a coal scam in which the coal ministry allotted more than a hundred coal blocks to private companies for captive mining, without following transparent competitive bidding procedures. A few influential private developers have cornered the lion’s share in this, on highly concessional terms, causing substantial loss to the public exchequer. As usual, it is the media that exposed this scam. It is Comptroller and Auditor General (CAG) who evaluated the loss. Under intense public pressure, the coal ministry has at last notified the introduction of a competitive bidding format for the future allotment of captive coal blocks. It is like shutting the stable door after the horse has bolted. 

When it came to pleasing a select group of private companies, the three central ministries, namely, environment, coal and power acted together in an orchestrated way to allot the coal blocks and clear the merchant power projects with unprecedented alacrity. One wonders whether the public financial institutions in the country have also unwittingly or otherwise have joined this bandwagon of a mega scam by extending loans to both the power companies and the coal investors! One should not be surprised if some of these institutions soon get sucked into this scam, ending up with unmanageable NPAs non-performing assets), as it happened more than a decade ago with the infamous Enron in Maharashtra.

I have mentioned this as an aside to illustrate how misplaced laissez faire policies in different sectors could together hurt the economy in a far reaching way.    

Coming back to the case of CIL, there is clearly a case of conflict between its role as a company that is fully accountable to its shareholders and its role as a PSU with all the associated national and social obligations. The government should make up its own mind in choosing between these two distinctly different roles of CIL. There cannot be a middle path in this. Unfortunately, what the government is trying to do in the case of CIL and for that matter, in the case of most PSUs, is to run with the hare and hunt with the hounds! It was determined to convert CIL into a listed company and, at the same time, do everything that went counter to it.

Caught between the influential group of private power producers on the one hand and a not too enthusiastic CIL management on the other, the government invoked its extraordinary power under CIL’s Memorandum of Association to issue a Presidential directive to the company to sign 20-year fuel supply agreements (FSAs) with new power projects, guaranteeing to supply at least 80% of the contracted quantity, that too at the prices approved by the government. This implies that CIL should bear the burden of the penalties for short supplies. CIL may even have to turn into an unwilling importer of coal to fulfil its obligation. CIL’s coal will not fetch its full market value. 

Why has the government thought of resorting to such an extraordinary step? I will cover this in the second part of my analysis.

Dr EAS Sarma, IAS, is a post-graduate in Nuclear Physics (Andhra University) and in Public Administration (Harvard University) and a Ph.D from IIT, Delhi. As a Union Secretary he has held the portfolios of Power, Economic Affairs and Expenditure. He quit the government in 2000 over differences regarding policy issues with the National Democratic Alliance government. He is the convener of Forum for Better Visakha (FBV), a civil society group set up in 2004.




Shibaji Dash

5 years ago

Coal was nationalised ostensibly for careful utilisation of the mineral and solve rehabilitation issues. Then coal mafias took over. Where was the money from the mafias going? The mafias were raided in 1989 for reasons more political at that time. But the mafias survive and prosper. Only they are no more dominated by a particular caste. They have been that way democratised. The monstrous grip over coal continues- only persona have changed.

dayananda kamath k

5 years ago

actually govt as owner has the responsibility to run the organisation efficiently. but all publ;ic sector undertakings are run as fiefdom of politicians. otherwise many of the public sector undertaking would not have been under loss. now govt is using lic premiume money to bail out banks. being owner of the lic. if the same thing were tobe done by a private owner he would have been behind bars. people are being looted of their assets and creating an impression of welfare state by taking a cut back in these projects.since last 9 years i have written to every authority who matters about how public money is being looted and every govt authority has failed.and country has lost crores of rupees. but no one is bothered.and i am amused when they raise the issue why any issue is being raised so late. it is because it will not be taken up in right earnest in initial stages. only it becaomes too hot to handle it will be taken up. and the delay will allow the influential to cover up their role. it is bigger conspiracy against the people of this country.

Nagesh Kini FCA

5 years ago

Immediately after independence, Nehru with his flair for Soviet type Planning went in for the Commanding Heights and went about setting up large PSUs when the Private sectors dare not venture.With high capital requirements and longer gestation periods.It set up
units in remote areas like Koraput and generated a lot of employment. Ministers like TTK and Kumaramangalam went about by nationalizing Insurance and Mining.Morarji sacked JRD from Air India Chairmanship.
That the Navratna PSU scrips appear in the BSE and NSE Tops is evidence enough of the public confidence.
With all around Policy Paralysis and the Government uncertain about its moorings, it is better they grant the PSUs functional autonomy with adequate self regulatory mechanism in place.
No more IAS babus on Boards.
CAG is doing an excellent job even overseeing the statutory auditors!


N Dey

In Reply to Nagesh Kini FCA 5 years ago

Sorry to say that Mr. Kini is not particularly right in overstimating the Commercial Audit wing of the CAG. The slipshod manner in which audits of PSUs are conducted, with right royal treatment given to (and demanded by) the audit teams (as the Income tax department does with the Revenue Audit teams year after year), is simply unthinkably ludicrous. A former director (fin) of Steel Ministry had told me in the late eighties as to how SAIL plants' audit was done and the ridiculous findings given by the auditors. If one is really interested, CVC can take up a study of the manner in which audit of PSUs is awarded by the babus of the CAG.
To be frank and candid, all drawing salaries from the govt. (that is India's people) are taking the country for a ride.

nagesh kini

In Reply to N Dey 5 years ago

I beg to disagree with Mr. Dey. I've not 'overestimated' the Commercial Audit.
As a CA on the CAG Panel, I've had occasions to conduct Statutory Audits of SAIL. I was not accorded any 'right royal treatment' neither did we compromise in reporting our findings.
That this profession has also degenerated like all others is a fact of life. There are some dedicated left too. Not all are bad apples.

Sandeep Jagre

5 years ago

Coal India Limited is govt. or semigovt. or autonomus ?

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