RBI governor Duvvuri Subbarao stated that the central bank is handicapped by the reliability of some of the basic data that we need to use in policy calculations. This has often resulted in policies turning out to be sub-optimal choices, he added
Mumbai: The Reserve Bank of India (RBI) today expressed concern over the sharply varying macroeconomic data, including those on growth and inflation, which it said on some instances led to off-the-mark estimates on the economy, reports PTI.
"In the Reserve Bank, we are handicapped by the reliability of some of the basic data that we need to use in policy calculations.
"In particular, the data we get on unemployment and wages do not inspire confidence as regards quality-making us second-guess how the provisional numbers may be revised upwards," governor Duvvuri Subbarao said today.
"Sharp volatility in the Index of Industrial Production (IIP) data is a problem. We need to understand what is leading to data volatility as it may lead to policy miscalculations," the governor told the 5th RBI Statistics Day celebrations at the RBI headquarters here.
"Each time when we have to make an assessment of inflation situation, we are left to double-guess how the provisional numbers may be revised upwards," he said.
"When we were making the policy, the IIP numbers available to us in February 2010 was 6.8%, whereas the economy was actually growing much faster. The provisional numbers, which are off the mark by significant margin, can mislead policy calculation," he warned.
The governor admitted that such revisions are also factors behind the RBI making inflation projections that proved to be below the actual number in the last fiscal year.
RBI had initially forecast an annual inflation at 5.5% by March 2011, but subsequently was forced to revise it upwards to a high 7% and then to 8%.
And finally when the year ended, it was at a much elevated level of 8.98%, which was ironically revised further upwards to 9.68% in June.
Similarly, the March IIP numbers were also revised upwards to 7.8% in June from the initial reading of 7.3% released in May, while a sharper revision was seen for the December IIP, which was upwardly revised to 2.5% from the provisional reading of a poor 1.6%.
"Erroneous signals from the then-available IIP data suggested moderation in growth and demand," as well as "the larger-than-usual upward revisions to the past inflation data, had the RBI's inflation projections remaining systematically below the actual outcome," Mr Subbarao admitted.
On the impact of the regular trend of sharp data revisions, the governor said, the RBI's policy formulation is also handicapped by frequent revisions to data.
"We make policies in real time and if the provisional data are inaccurate, the resultant policies can turn out to be sub-optimal choices," he said.
Citing the sharp changes in the gross domestic product (GDP) numbers, Mr Subbarao said, "For FY09-10, the advance estimate of GDP growth rate at market prices from the expenditure side that came out in February 2010 was 6.8%. That was changed to 7.7% in the revised estimate in May 2010 and further to 9.1% in the quick estimate in February 2011.
"Therefore, policy that per force had to use information on advance estimate was fraught with the risk of underestimating the growth momentum," the governor said.
Stating that the recently released employment data throw up a paradox, he said they simultaneously indicate fewer jobs created in the five years to 2010 along with a decline in the long-term unemployment rate.
On the issue of wage statistics, he said, the upward pressure on wages in the unorganised sector is inconsistent with what are believed to be high rates of unemployment and underemployment in the informal economy.
Finally, the website owned by the ADA group says that there is no potential for it in the youth networking business which is dominated by Facebook and other global players, and that its future lies in e-commerce rather than 'free' social networking services
As reported by Moneylife on 1st July BigAdda.com, the blog and youth networking site owned by the Reliance Anil Dhirubhai Ambani (ADA) group, has said that it will discontinue its social media services and focus on its e-commerce initiatives. (Read, "BigAdda to scale down social-networking services".)
In a statement today, Rohit Sharma, chief executive, Reliance Entertainment's digital business, said, "This is a conscious decision to transition BigAdda.com to e-commerce business. We believed that local social media platforms would do exceptionally well. However, local social media networks show no potential anymore with the dominance of Facebook and other global players. We believe that the growth drivers of the digital space are e-commerce, gaming and video on demand (VOD)."
He, however, clarified that the blog written by Bollywood superstar Amitabh Bachchan (BigB, as he is popularly known in film circles) would continue on BigAdda.com. "Fans can continue to read the superstar's blog daily on www.bigb.bigadda.com as BigB's blog has an identity of its own and will continue to connect Big B with millions of fans across the globe," Mr Sharma said.
BigAdda's e-commerce has been in operation since the last three months on a pilot phase and has seen the fastest ramp-up of orders compared to any e-commerce player in India, recently. BigAdda has crossed Rs2 crore in gross value of transactions per month for June, and is poised to be one of the leading e-commerce players in the country, with its combination of readers' offers and the e-tailing business model, the company said.
The total e-commerce market in India is estimated to be between Rs3,000 crore and Rs3,500 crore with contributions from teleshopping around Rs1,500 crore, readers' offers (including teleshopping) Rs1,000 crore and online Rs700 crore. Mr Sharma said, "The alternate retailing market, or readers offer, and teleshopping is growing at a compound annual growth rate (CAGR) of 30%, while the online segment is growing at 50% CAGR. With increasing spending power and aspirations of youth in small towns and the acceptance of credit and debit cards as a mode of online payment, e-commerce will grow exponentially in India."
The ADA group launched BigAdda in 2007 with much fanfare, with the stated aim of achieving a user base of 10 million by 2010. Currently, the site caters to around 5.5 million youth, out of which 3.5 million registered users are from small towns. Although, BigAdda was launched with an aim to evolve a youth community, it failed to stick to this platform. Even today, it is better known as a blog space for celebrities, than for commonplace socialising. Over the past few months, BigAdda also tried to concentrate on gaming, instead of social networking services.
The agency is probing whether baba Ramdev's investments and transactions were carried out in conformity with guidelines laid down by the RBI and other regulatory bodies
New Delhi: The Enforcement Directorate (ED) has asked various agencies to obtain documents related to companies and several trusts affiliated to yoga guru baba Ramdev as part of its discreet probe into his offshore assets and investments, reports PTI.
The ED is verifying the holding patterns and other details of the companies through the Registrar of Companies (RoC) and the ministry of corporate affairs, official sources said.
The agency is probing whether baba Ramdev's investments and transactions were carried out in conformity with guidelines laid down by the Reserve Bank of India (RBI) and other regulatory bodies, they said.
The ED is also probing baba Ramdev's island in Scotland which was gifted to him by a couple, who are amongst his followers.
The Little Cumbrae Island, off the fishing town of Largs in Scotland, serves as the baba's base overseas and also as a wellness centre.
The discreet probe, according to the sources, is aimed at checking the flow of money and transactions through various trusts floated by baba Ramdev, including the Patanjali Yogpeeth Trust, Divya Yoga Mandir Trust and Bharat Swabhiman Trust.
The directorate, after completing the probe, may decide to formally register a case under the provisions of the Foreign Exchange Management Act (FEMA) or the stringent Prevention of Money Laundering Act (PMLA), if findings show anything unlawful, they said.
The discreet probe, also called 'source' probe by investigators, is done on the basis of available documents and intelligence information from various official databases.
The Central Bureau of Investigation (CBI) has also registered a preliminary enquiry (PE) against Mr Balakrishna, a close aide of baba Ramdev, for allegedly using forged documents to acquire passport.