Thoughts on GDP(PPP) of India

The gross domestic product of a country is the market value of all final goods and services produced in a country in a given period of time. It is used to measure the economic power of country.

According to the international monetary fund, China has a GDP of 2,234,133,000,000 USD which makes it the fourth largest economy in the world. India has a GDP of 771,951,000,000 USD which makes it the twelfth largest economy in the world.

How is it then, that the media hails China as the second largest economy in the world, and India as the fourth largest economy in the world? The answer is GDP(PPP) which adjusts the gross domestic product to account for the purchasing power of a country with respect to the purchasing power of USD. In other words, a basket of goods is cheaper in India than in USA, and the Gross Domestic Product based on Purchasing Power Parity [GDP(PPP)] accounts for this change. Thus although Indian people generate a lesser GDP, the people of India can have similar lifestyle as the people of USA with lesser money, hence making India a much stronger economy than it seems.

GDP(PPP) is a fairer way to look at the economic strength of country.

Some thoughts on the real situation about India:

• Purchasing Power of a currency is reduced by inflation. For example, when I was a kid my mom used to give me 3 rupees to buy half a litre of milk, but the last time I checked half a litre of milk was around 10 rupees. So if I had put that 3 rupees in a piggy bank, I wouldn’t be able to buy what was worth 3 rupees then. This phenomena is called inflation. Inflation eats away the purchasing power of money.

  Inflation is self-sustaining in some ways. When people realize that it is not worth saving, they spend, but as more money is spend, buisnesses will find it profitable to charge more for the goods and services, and hence increase the prices of goods and reduce the value of a rupee.

  One of the ways Governments fight inflation by increasing interest rates, so that people will save more, and thus keep inflation under a check. Indian government has done just that, they have increased the interest rates 4 times last year to combat an inflation that made 100 rupees worth of goods in 1985 worth 497 rupees in the February of 2007, which made rupee cheaper in value. But the average ages of salaried employees is only 26.5 years who do not prefer to save money and live from paycheck to paycheck, thus they will keep aiding inflation.

  To make things even scarier, since 1960, 69% of the world’s market-oriented countries have suffered at least one year in which inflation ran at an annualized rate of 25% or more. On average, those inflationary periods destroyed 53% of purchasing power.(Source)

  Finally, rising prices allow the Indian Government to pay off her debts with rupees that have been cheapened by inflation. Completely eradicating inflation runs against the economic self-interest of any government that regularly borrows money.(Source: Laurence Siegel of Ford Foundation)

  SO high inflation rates in India are here to stay, which will eventually bring the Purchasing Power Parity down and thus making India weaker economy based on GDP(PPP). Personally, I think, once Manmohan Singh is gone, there will be a 69% chance that India may get hit by hyper-inflation at the rate of 25% per year based on the previously mentioned data.

• My guess, based on the iPod index is that the basket of goods in consideration for adjusting the GDP of India based on purchasing power parity, contains only locally produced basic goods. If the basket of goods contains products of a quality comparable to that of US goods OR products that were produced in another country, the assumption that Indian people can have similar lifestyle with lesser money becomes invalid.

  With globalization becoming a trend in India, the assumption that the basket of goods will only contain locally produced goods can no longer be true. For the Indian people to have a similar lifestyle as in USA, they will have to buy better quality OR foreign goods for which they will have to pay more. Thus GDP adjusted for Purchasing Power Parity i.e. GDP(PPP) for India is lesser than it seems.

• The actual GDP of India without adjusting for the Purchasing Power Parity of India is only a mere 34.5% of the GDP of China, and 6.1% of the GDP of USA. Thus although, India is the twelfth largest economy, it is because there are wide gaps in between the GDPs of countries. India still has a really long way to go to even have a GDP as that of China. The world cannot stop its growth just for India, it is a race with no end. Smaller countires like Brazil and South Korea have already overtaken India in terms of actual GDP.

  Even if the GDP of India is adjusted for the purchasing power parity(PPP), it is still only 38% of the GDP(PPP) of China.

• It is rumored that, newly developed infrastructure in India is unplanned and will remain unmaintained after DBFO (Design, Build, Finance Operate) period is completed. e.g. While the diagonals of Golden Quadrilateral project remain incomplete, in February 2006, a 600 meter stretch of the highway connecting Kolkata to Chennai subsided into the ground, opening up ten meter gorges near Bally, West Bengal. This stretch had been completed a year back by a Malaysian multinational firm, selected after global tendering.

Future of Singapore

Bad News: It is smaller than Israel and Hong Kong. No natural resources. Even the hi-tech military has to depend on foreign food & water. Fresh water is imported from a single not-so-friendly country – Malaysia. The entire economy is an entrepôt, i.e. a trading center, or simply a warehouse, where merchandise can be imported and exported without paying import duties, often at a profit. Electricity production is entirely dependent on fossil fuels which will dry up in the next 50 years, in which case everything will have to be nuclear.

Birth rate is low – 9.34 births/1,000 population (2006 est.). Population is low – 4,492,150. Population Density is high – 16,392/sq MI which is higher than Kerala. Death rate is low – 4.28 deaths/1,000 population. So people are becoming older.

The government is trying to positioning itself to become a knowledge-based economy. So it is trying to import human resource. But it is hard because, the general misconception in the rest-of-the-world is that anything resembling a chewing gum can get you into trouble.

The government is hence trying to import youth through educational institutions. So it has subsidized tertiary education using Tuition Grants which require you to work in a Singapore registered company for 3 years. Full scholarships are still hard to come by, although most of the potential scholars like me would exhibit acts of reciprocative altruism for the greater good of the country upon getting one.

Good News: This place is a true utopia. It has an open business environment, relatively corruption-free and transparent democracy, stable prices, and one of the highest per capita GDP in the world which had a 7.7 percent growth last year. Singapore has been rated as the most business-friendly economy in the world. It has the largest and most efficient sea-ports in the world. The airport is also one of the largest in the world. Universities are rated one of the best in the world according to Times Education Supplement.

Possible Disaster scenarios in the next 50 years:

1. Fossil Fuel shortage.
2. Fresh water shortage.
3. Disease ( H5N1, MDR TB)

India in Numbers

I was wrong

I was wrong about the Matthew-Luke contradiction posted on March 1st, 2007 and February 21st, 2007. It could be possible that Luke’s 43 ancestors list from David to Jesus, traces it through Mary and Matthew’s 28 ancestor list from David to Jesus, traces it through Joseph.

Although a difference of 15 generations is observed, it could be possible that the ancestors of Joseph had an higher average age at which they gave birth to the next generation compared to Mary’s ancestors, and they could be born at reasonably similar times where they could get married.

That means my strongest argument against the most obvious contradiction in the Bible is wrong. It cannot be proved that Luke’s list does not belong to Mary’s ancestors & Matthew’s list does not belong to Joseph.

Moreover, all the circumstantial evidence about the culture of their times, point to the fact that Fruchtenbaum could be right about the fact that Luke’s list is Mary’s and Matthew’s list is Josephs.

That means there is a good chance that Emmanuel prophecy of Isaiah is true. And Jesus is indeed the son of God.

Nightmares

I had a bad dream last Saturday. I do not remember the details now, but I do remember getting scolded my grandmother & mother for being the way I am. I could not see them clearly, because I could not open my right eye, and I saw them through my partially opened left eye. I tried my best to open my eyes, but I couldn’t move eyelids to see. I tried keeping them open with my hands but they would close when I let go. My mom & grandmother seemed not to notice my paralyzed eyelids. I asked my mom “Are my eyes open?” and she said “Yes.”. But I felt irritated because I knew I couldn’t see with my eyelids closed, and they were lying to me that there is nothing wrong with my eyes.

I tried my best, and suddenly I was awake.

Is the Bible the word of God? Part 2

I’ve been doing some reading about the Luke 3:23-38, Matthew 1:2-16 contradiction, which I described in my previous post. From what I understand Christians interpret this by saying that Luke’s list belongs to Mary, and Matthew’s List belongs to Joseph.

They argue that there exists a lot of circumstantial evidence from the Bible itself:

• Luke’s birth narrative is through the eyes of Mary, while Matthew’s is through the eyes of Joseph. Thus, Luke could have received his material through Mary (or someone close), thus it is quite possible that he received her genealogy.
• Luke 3:23 reads, “Jesus…being supposedly the son of Joseph, the son of Heli, etc.” Luke certainly draws attention to the fact that Jesus was not truly Joseph’s son, so why would he then go to all the trouble in listing Joseph’s genealogy?
• After considering the Greek of Luke 3:23, Robert Gromacki believes it should be translated as follows:
  

  “being the son (as was supposed of Joseph) of Heli, of Matthat, etc.”

  Gromaki states: “Since women did not appear in direct genealogical listings, Joseph stood in Mary’s place, but Luke was careful to note that there was no physical connection between Joseph and either Jesus or Heli.”

• Luke’s genealogy also lists Adam as “the son of God.” This would indicate that one would have no grounds for insisting that the term “son” meant only the direct, biological offspring. Thus, one could think of Jesus as the “son of Heli.”
• Whatever one makes of such reasoning, it is certainly possible that the above mentioned explanations might be true, thus a contradiction has not been proved. Hence we must believe in it.

My counter arguments:

• [Update: This argument is wrong. See comments.] Luke’s list has 43 generations from David to Joseph (or Mary, as Christians claim), but Matthew’s list has only 28 generations from David to Joseph. That would mean that if Luke’s list is indeed Mary’s genealogy, then Mary would be 15 generations younger than Joseph. 15 generations is a lot of time even if the average age at which all of Mary’s ancestors gave birth to the next generation was just 10 years, in which case Mary would be 150 years younger than Joseph! That is clearly not the case.

  Let us assume that Matthew’s list got shorter because of loss in translation, and other errors. If that is true, let not the evangelists admit that Bible is not true (i.e. inerrant) in the literal sense. Hence it has to interpreted, in which case, they should not hold it as evidence against scientific evidence.

  The most holy book, has 15 errors in such a short passage. Many of those errors could be claimed to be because of human intervention. Then what does that say about the amount of strain we should have when living exactly by its preaching?

  Does it make sense that The Holy Word of God given by God so that ordinary men may live by its above-human-logic morality, is infused with silly logical errors so that we may be confused by it? This is not strictly a valid argument in Christianity because God the Potter can choose to make the pot anyway he wishes.

• There is no explicit mention that the genealogy is Mary’s. The counter argument to this, a s cited in this site:

  The genealogy would lose all appeal if it was explicitly cited as Mary’s. However, it does seem to be implied. Thus, one could discern this truth after they had converted and studied the text. This would account for the early church’s belief about Mary’s Davidic descent.

  My argument against that is: What matters most? Is it truth or “appeal”? Are some words in the Bible written just for the appeal of it? Although it does seem to be implied, the fact remains: there is no explicit mention that the genealogy is Mary’s.

• The last argument(see the previous list) in support of Mary’s genealogy in Luke mentions that there is good probability that all other arguments for the case could be true and hence the Matthew, Luke contradiction cannot be proved yet, hence Jesus must be believed to be the son of David who fulfilled the Isaiah prophecy. It is like saying that men definitely did not go to the moon because there is a chance that the counter arguments against it are true.