Saturday, May 05, 2012

Growing Indian Economy... or Shrinking??

Its a paradox. I was on Cnn Money website, looking at the world's largest economies and India did not figure in the top 10. I was wondering how is that possible where most of the top countries are going through a sluggish growth or recession (England, Spain).
Upon checking their timeline, I figured that India was 9th in the pecking order in 2010. I was thinking of a plausible reason for this when it struck me. Its due to Rupee Depreciation.
It may sound strange. We had around 10% inflation and 7%+ growth on top of that makes nominal growth add upto 17%+, and yet... Hmm. I checked out Wiki . Per IMF we shrunk by 6% between 2010 and 2011. The  Rupee depreciated around 17-18% between 2010 and 2011(against dollar). But if I go by above maths, it should have depreciated around 23% for the GDP to fall by 6% in dollar terms.
So these numbers are a bit misleading. However in the CIA world fact book India seems to be $1.8. Can 2 authentic data sources be 10-12% apart? Possible.