TOC of Nov 30 edition

(Abstract sketch to be used in the background of front page?)

Follow Up

Newspaper Readership Statistics
123 Agreement

National
Tata Supercomputer 4th Fastest
India to Promote Homeopathy
Current Trends in Inflation
Muscle power and Credit Card Industry
International
Cancer Study Wasted Millions
Only the Paranoid Survive
Emergency in Pakistan
Millennium Development Goals
Turbulent Greenspan

News Snippets

An Abstract Sketch

Posting again.

The life of an IT professional – always thinking in analytical terms?

 

 

Cancer studies 'wasted millions'

http://news.bbc.co.uk/2/hi/programmes/file_on_4/7098882.stm

Charity is mostly well intentioned but easy availability of money to those receiving charity may result in less than efficient use of the same. On November 20, BBC reported that millions of pounds of charity donations and taxpayers' money have been wasted on worthless cancer studies.

Thousands of studies have been invalidated as some scientists not carrying out simple and inexpensive checks to ensure they are working with the right forms of human tumour cells.

Earlier this year eminent cancer specialists from the UK and USA wrote to the US health secretary urging tough action to end this waste of time, effort and money. As per the report, the US authorities observed that there appeared to be "abundant evidence" that many studies and publications had been compromised.

While this is specific to cancer research, it may raise questions on the efficacy of charity based research for other medical ailments as well.

India to promote homeopathy for mother, child health

http://www.earthtimes.org/articles/show/133241.html

http://pib.nic.in/release/release.asp?relid=32445

http://en.wikipedia.org/wiki/Homeopathy

There are reports that India will promote homeopathy for bettering mother and child health in areas like anaemia, asthma and diarrhea. 'Homeopathy is used by many people in India but the usage is very patchy. Through a concerted campaign, we are going to promote homeopathy across the country, especially for mother and child health promotion,' joint secretary health V. Samuels said. Under the National Rural Health Mission (NRHM), the government has decided to promote this form of medicine at the national, state and district level. 'All the hospitals and homeopathy practitioners will be brought under a network to facilitate the success of the program,' Samuels said at a function.
Speaking at the Valedictory Session of the National Campaign on Homoeopathy – Workshop for Healthy Mother and Happy Child, the Union Minister for Health & Family Welfare, Dr. Anbumani Ramadoss said today, that these national campaigns being launched by the Department of Ayurveda, Yoga & Naturopathy, Unani, Siddha and Homoeopathy (AYUSH) will be serving a very useful purpose of focusing attention on the urgent need to integrate the Indian Systems of Medicine and Homoeopathy with mainstream health care in the country. He further noted that the integration of AYUSH services with mainstream health care has long been the stated policy of the Government, but practical integration has not really taken place in most parts of the country, and that, by focusing on specific AYUSH interventions for common health and disease conditions, these national campaigns will generate more enthusiasm among health administrators for integrating Indian Systems of Medicine and Homeopathy with mainstream health care in the country.

It is a common knowledge that Homeopathy is unsupported by modern scientific research. The most ‘potent’ medicines are pure distilled water with not a single molecule of medicine even in millions of gallons of preparation. The idea that any biological effects could be produced by these preparations is inconsistent with the observed dose-response relationships of conventional drugs. The proposed rationale for these extreme dilutions - that the water contains the "memory" or "vibration" from the diluted ingredient - is also counter to the accepted laws of chemistry and physics and has failed to get any support from scientific community.

Any positive results obtained from homeopathic remedies may be purely due to the placebo effect, where the patients subjective improvement of symptoms is based solely on the power of suggestion, due to the individual expecting or believing that it will work. Critics cite the lack of viable scientific studies for the effectiveness of homeopathic remedies as evidence that they are not effective and that any positive effects are due to the placebo effect. They also contend that homeopathy is inherently dangerous, because homeopaths offer a false hope to patients who could be getting proper treatment.

However, the supporters say that millions of persons are benefiting from homeopathy, and that popularity of the same is a testimony of its curative powers.

Different countries have different stand on this system of medicine. While FDA of USA allows it on the pretext that placebos don’t harm anyone, some European countries as well as India have more favorable approach towards it.

It is worth noticing here that a few decades back, when Indian Parliament passed a bill allowing homeopathy to be considered as one of the national systems of medicine, the main supporting reason was its low cost – which was important in a country like India. Now that metros are dotted with 5-star homeopathy clinics, and the revenue flow is quite comparable with the allopathic clinics, the game has certainly changed.

Tata supercomputer ranked 4th best in world

More investigation needed. Flagging Red because:

1. CRL's innovation is not clear
2. Very little detail is available about Karmakar's prposed break-through interconnect architecture based on 'projective geometry'.

http://computing.in.msn.com/Articles/Article.aspx?cp-documentid=1097015

Computational Research Laboratories, a wholly-owned subsidiary of Tata Sons in Pune, integrated the with their own innovative routing technology and achieved 117.9 TFlop/s (`teraflops' or trillions of calculations per second) performance.

For the first time ever, India has placed a system in the top 10 of the Top 500 Supercomputer Sites List with Computational Research Laboratories - a wholly-owned subsidiary of Tata Sons in Pune - installing a HP Cluster Platform 3000 BL460c system which was ranked fourth.

They integrated this system with their own innovative routing technology and achieved 117.9 TFlop/s (`teraflops' or trillions of calculations per second) performance.

http://www.hindu.com/2007/11/14/stories/2007111453211300.htm
The Tata supercomputer is called EKA, the system uses 14240 Intel’s high-speed (3 giga hertz) ‘quad-core’ Clovertown (Xeon 53xx) processors in nearly 1,800 computing nodes put together on a Hewlett-Packard Cluster Platform 3000 BL460c system. According to the official press release of the rating body, the integration of the system was done using “their own innovative routing technology”. The routing is based on dual-rate Infiniband switches from Mellanox Corp. and Voltaire Corp.

Vision of Dr. Narendra Karmarkar

Interestingly, however, the release from the Tata Group fails to make any mention of the main architect and prime mover of the project, Dr. Narendra Karmarkar, an alumnus of IIT Bombay and formerly of the Tata Institute of Fundamental Research (TIFR), who quit last year following lack of adequate financial support (to the tune of Rs. 400 crore) for his supercomputing project from the institute and joined the Tata Group having found the backing of Ratan Tata and the management of the group (see Business Line, May 6, 2006).

The CRL was established in July 2006 by a group of “like-minded alumni of IIT Bombay,” as the CRL website states.

However, earlier this year, Karmarkar left the Tatas (along with his core team) when they fell apart following differences over the overall plan and the set of goals and objectives of the HPC project, which included that the first system should be given to the Indian government.

But there can be little doubt that the basic idea of the architecture that has been used in the system that has been included in Top 10 belongs to Dr. Karmarkar.

According to Dr. Karmarkar, only five percent of his ideas, which he had shared with the Tatas, have been made use of the current architecture. “With even this, if it can make it to the fourth place, the system can surely make it to No.1 when all my ideas are incorporated,” he says.

“The design and concept took nearly four years, much of it was developed during my days at the TIFR. I have a long and complex plan of how to go about putting all my ideas into an HPC system. But I also have a balanced set of objectives. I am looking for a backer who would not only provide the money but should share the vision and the entire objective,” he added.

IISc’s distinction

In the Top500 List, nine Indian systems have been included (marking an 1.8 per cent share).

The other countries in the List include compared 10 of China, 11 of Taiwan, 20 of Japan, 31 of Germany, 17 of France, 9 of Spain, 48 of the U.K. and 283 of the U.S. Interestingly only one Korean system has made the grade.

The other Indian systems include an IBM eServer Blue Gene Solution of the Indian Institute of Science (IISc), with 18.7 teraflops sustained performance and 23 teraflops peak performance and ranked 58th, another HP Cluster of Tata-CRL with 1440 processors with 9.3 teraflops sustained performance and 15.4 teraflops peak performance and ranked 179th , and six IBM systems in various industrial enterprises, ranked 152nd, 158th, 336th, 339th, 340th and 371st respectively.

http://www.hindu.com/2007/11/16/stories/2007111654411200.htm

It is to the great credit of the Tata Group that it could bring together people from diverse fields — mathematics, physics, optoelectronics, cryogenics, computer engineering, and software — for this project. This could happen because of the reputation of Narendra Karmarkar (of the Karmarkar algorithm fame) who was instrumental in the creation of the CRL and the Tatas re-entering the HPC field. However, because of his quitting the Tata venture early this year, his revolutionary idea of using projective geometry for interconnection among nodes remains to be exploited. The Tata system still uses the traditional architecture in which performance tends to saturate as the number of nodes becomes large. The innovation the Tata researchers have made is in terms of software optimisation, routing technology, and cooling techniques to achieve higher speeds.

http://www.thehindubusinessline.com/2006/05/06/stories/2006050604270100.htm

The Initial Plan

A key limiting factor in achieving very high computational speeds in current HPC parallel architectures is the bottleneck caused by the numerous interconnects between the many parallel processors.

The new architecture, according to its inventor, Prof Karmarkar, uses a new theory of interconnects based on the mathematical principles of `projective geometry' to overcome the problem.

He has claimed that the machine built on this new architecture will outperform the fastest machines of today like the Blue Gene of IBM, which has a sustained computational speed of 280-300 teraflops (a trillion or 1012 floating point operations per second), and will aim to achieve a performance of petaflops (1015 flops).

Chip design
The design will make use of the off-the-shelf fast 64-bit processors (of Itanium 2 family) developed jointly by Hewlett-Packard and Intel.

Intel and HP, according to Prof Karmarkar, would also assist in system integration, if the HP-Intel processor is used.

The implementation of the interconnect architecture will, however, be done using a new high-speed switching chip made in Israel.

This chip has apparently been developed by an Indian computer scientist.

BOOK REVIEW : Only the paranoid survive

Posting here with permission.

By Jayakumar Balasubramanian:-

Author: Andrew S grove

Price: 600 INR

Andrew is one of the famous CEOs, who lead Intel into the path of microprocessors. In this book he shares his experiences, which can be applied to individuals’ career as well as organizations. Andy introduces a term called 'Strategic Inflection Points' (SIP), which has got equal probability to make or break any business. The businesses who adapt these SIPs (paranoids) will go successful, failing which will make them to shut the shop. He explains about how the businesses are affected by many factors which he calls as '10X' forces which primarily drive the organization beyond the SIP. These 10X force could be in the form of new technology, innovation, economic reforms, business model etc.

Throughout the book, Andy explains his SIP and 10X concepts with the PC business as an example. In 1970s the PC business was a 'vertical' one which was heavily dominated by companies like Digital Electronic Corporation (DEC). By 'vertical' he means that the hardware, OS, software, support will be provided by the PC manufacturer himself. Companies like DEC where pioneers of this vertical business model and no-one could even question their domination.

However the 10X came in form of two major innovations:

1. Micro-processors: This innovation brought the computing to become de-centralized and the power shifted from mainframes to Personal Computers (PC). The cost of computing came down tremendously and lot of component manufactures (like memory, keyboard, disks etc...) emerged in the eastern world (Singapore, Malaysia, Japan etc..) from nowhere. Fueled by system integrators (like Compaq) the computing industry was going through 10X amount of change.
2. Software revolution: The first innovation lead to the change in the way people perceive software. From the 'processor-tied’ approach the software became more of 'usage-tied' and Microsoft rode this wave big time. The perception of seeing software only as a 'freebie' with the hardware changed totally.

Now the only chance to stay in the business is to adapt to this change. Initially Intel was into memory chip manufacturing. When the 10X change happened in the computing industry, Andy made Intel to exit from the memory business and move to the microprocessor business. This caused what is popularly known as 'WINTEL’ phenomenon (Windows + Intel) and the rest is history.

After explaining this 10X, the author extends his discussion into people side. When such chance is going in the industry, its extremely challenging to change the mindset of the people and make them work in the new technology. This is mainly because people still 'perceive' that the old technology (say mainframes) will be alive and PC cannot change the world. Taking people through this change is very challenging for any leader and he calls such changes as 'death-valley'. He also talks about how important it is to listen to lower level employees, who he calls as 'Cassandra'. These Cassandra’s would bring informal but important information about the 10X well before it is understood by the top management.

Registrar of Newspapers for India

https://rni.nic.in/pii.asp

I. GENERAL REVIEW

 

1.1.1.  In a democratic set up, it is important that all the citizens have the right to information.  The news regarding the happenings within and outside the country has to be disseminated to the people.  In the past, the print media shouldered the responsibility of disseminating the news.  But, today with the growth of information technology, audio and visual media are in the field with instant and wide coverage.  We thought that the advent of information technology would affect the print media.  But, it didn�t happen; the statistics also shows that no technology can beat the print media, which always finds its own level.

1.1.2.  The print media has responded to the new changes and challenges with its modernization.  They have accepted the information technology, which resulted in better coverage with great speed and affordable price.  The readership of newspapers is growing.  The statistics also shows that the people prefer their regional language newspapers and that is why the regional newspapers are venturing out to bring editions from other cities where there is sizeable population of the respective language.

          1.1.3. The publishers under Section 19D of the Press and Registration of Books Act, 1867, are required to submit Annual Statements to the Registrar of Newspapers for India. These Annual Statements are the principal source of data for compilation of this Report.  All publishers do not submit their Annual Statements.  Hence, this report cannot be treated as comprehensive.  It can give only a broad overview on the general trend of the Indian Press based on the number and circulation of the newspapers.  Since, the data is based on the number of annual statements of the year 2005-06 and these can only be termed as claimed circulation figures.  It is worth mentioning that by authorizing the Regional Offices of other media units of the Ministry and the offices of the District Information Officers through out the country, to collect the annual statements, their number has shown a significant increase.

1.1.3. During 2005-06, 2074 new newspapers were registered. Four newspapers ceased publication.  As on 31^st March 2006, there were 62,483 registered newspapers on record as against 60,413 at the end of March 2005.   The total circulation of newspapers increased from 15,67,19,209 copies in 2004-05 to 18,07,38,611 copies in 2005-06.  The number of newspapers submitting annual statements also increased to 8512 from 7225 during the year.

  

ANALYSIS OF DAILY NEWSPAPERS

 

1.2.1. As per the annual statements received during 2005-06, the number of dailies being published in the country was 2130.  Their claimed circulation figure was 8,88,63,048 copies, 12.93% higher than that the previous year.  Hindi had 942 dailies claiming a circulation of 7,66,98,490 copies, while 201 English dailies claimed 3,41,06,816 copies. (Chapter 3 Table 3.5)

1.2.2. There were 39 Tri/Biweeklies with a circulation of 5,66,198 copies, compared to 40 with a total circulation of 5,53,873 in 2004-05. (Chapter 3 Table 3.5)

1.2.3. 900 daily newspapers provided information on their working and organization, the analysis of which can be seen in Chapter VI.

 

ANALYSIS OF PERIODICALS

 

1.3.1. The majority of Indian newspapers were periodicals.  Circulation details were available from 6343 periodicals which totaled 9,13,09,365 copies.   Out of these, 3428 were weeklies, 955 fortnightlies, 1471 monthlies, 219 quarterlies, 49 annuals and 221 of other periodicities. (Chapter 7 Table 7.3)

1.3.2. Circulation of periodicals increased from 7,74,76,070 copies during 2004-05 to 9,13,09,363 copies in 2005-06.  Weeklies were leading with 5,05,80,648 copies, followed by monthlies (2,11,36,710), fortnightlies (1,23,09,948), quarterlies (15,52,138) and annuals (29,81,256),  (Chapter 7 Table 7.2)

 

 

LANGUAGE-WISE ANALYSIS

 

1.4.1. Newspapers were registered in English and 22 main languages listed in the Eighth Schedule of the Constitution.  Newspapers were also registered in 100 other languages including dialects and a few foreign languages.

1.4.2. As per the data from Annual Statements received, the highest numbers of newspapers were published in Hindi (4131), followed by English (864), Gujarati (775), Urdu (463) Bengali (445),  and Marathi (328). (Chapter 3. Table 3.5)

1.4.3. In circulation, Hindi newspapers continued to lead with 7,66,98,490 copies followed by English with 3,41,06,816 copies.  Gujarati Press with 98,44,710 copies came third.  Urdu and Malayalam language press closely followed with 92,17,892 and 82,06,227 copies respectively. (Chapter 3. Table 3.2)

1.4.4. Among language Dailies, Hindi lead with 942 newspapers followed by 201 in English.  The languages that published more than 100 daily newspapers were Urdu (191), Telugu (147) Marathi (130) and Gujarati (100).  Circulation-wise, Hindi dailies maintained its dominance with 3,76,42,520 copies.  English Dailies followed with a circulation of 1,29,14,581 copies. (Chapter 3. Table 3.5)

 

 

STATE-WISE ANALYSIS

 

1.5.1. During 2005-06, the largest numbers of newspapers were published from Uttar Pradesh (1913), followed by Delhi (1133), Gujarati (817), Rajasthan (742), Maharashtra (642) and West Bengal (505). (Chapter 2. Table 2.2)

1.5.2. Uttar Pradesh topped in total circulation, with 3,32,91,882 in 2005-06, followed by Delhi  with 3,06,03,048 copies.  Maharashtra retained its third position with 2,04,72,8281,59,59,124 copies. (Chapter 3. Table 3.3)

1.5.3.   Uttar Pradesh had the largest number of daily newspapers (384), followed by Maharashtra (206). Daily newspapers are published from all the States.   However, no circulation details were made available from the Union Territory of Lakshadweep. (Chapter 2. Table 2.2)

1.5.4.    Dailies from Uttar Pradesh with a total circulation of 1,34,92,557 copies were at the top, followed by Maharashtra with 1,05,37,174 and Delhi 88,08,045 copies. (Chapter 3. Table 3.5)

1.5.5. A notable feature was that Orissa achieved the distinction of publishing newspapers in 17 major languages. Delhi and Maharashtra came next with 11, Kerala 9 and Gujarat with 6.   Uttar Pradesh published the maximum number of newspapers in a single language i.e., 1608 in Hindi.  Other states with notable number of language newspapers were Rajasthan 701 in Hindi, Delhi 594 in Hindi, Gujarat 741 in Gujarati, West Bengal 389 in Bengali, Madhya Pradesh 466 in Hindi and Maharashtra 312 in Marathi.  It was also noticed that regional language newspapers were leading both in number and circulation in all major States. (Chapter 2 Table 2.3).

 

 

CIRCULATION PATTERN

 

1.6.1. Out of the 8512 newspapers that have submitted their annual statement, 350 were �big�, 1555 �medium� and 6607 were �small�.  The �big� newspapers circulated   6,76,98,371 copies, the �medium� 6,41,55,462 copies, and �small� 4,88,84,778 copies. (Chapter 3. Table 3.6)

1.6.2. In the �big� category were 214 dailies and tri/bi-weeklies. In the �medium� category, the number stood at 906 and in �small� 1049 dailies. Their circulation accounted for 3,82,50,890 copies, 3,84,76,981 copies and 1,27,01,375 copies respectively. (Chapter 3. Table 3.6)

 

CIRCULATION LEVELS

 

1.7.1. Ananda Bazar Patrika, a Bengali daily, published from Kolkatta was the largest circulated single edition daily with 12,34,122 copies followed by Hindustan Times, an English daily from Delhi with 11,36,644 copies.  The Times of India, English daily published from new Delhi came third with 11,02,521 copies.

1.7.2.  The Times of India, having six editions in English with a combined circulation of 25,42,075 copies came first among multi-edition dailies.  Dainik Bhaskar in Hindi having 18 editions, claiming a combined circulation of 21,81,948 copies stood second. Dainik Jagran, (Hindi) with 14 editions and a combined circulation of 21,11,316 copies, occupied the third position.

1.7.3. Among periodicals The Hindu, English weekly from Chennai topped with a circulation of 11,02,783 copies, while The Sunday times of India, English weekly, published from Delhi came second with a circulation of 10,38,954 copies.

 

OWNERSHIP

 

1.8.1. Out of 8512 newspapers, as many as 6686 were owned by Individuals, 1122 by Joint Stock Companies, 260 by Societies and Associations, 222 by Trusts and 150 by Firms and Partnerships.  41 newspapers were brought out by the Central and State Governments. Cooperative Societies, Educational Institutions and the like, owned the remaining 31.

1.8.2. Newspapers owned by Individuals had the largest share in circulation i.e.,  52.71 per cent, followed by those owned by Joint Stock Companies 39.04 per cent.  427 common ownership units brought out 1550 newspapers during the year.  These units also published 167 papers, which had no news content.  Newspapers, belonging to these units, had a circulation of 8,13,98,828 copies, i.e. 42.52 per cent of the total circulation of the Indian Press.  Dailies published by these units had a circulation of 5,72,55,780 copies i.e. 64.43 % of the total circulation of daily newspapers.

 

CONTENTS

 

1.9.    Out of the total 6343 periodicals, 4238 dealt with News and Current Affairs, while 421 were dealing with Social Welfare.  Apart from these there were other periodicals, dealing with various subjects, such as Religion and Philosophy, Medicine and Health, Education, Finance and Economics, Literature and Culture, Children, Women, Law and Public Administration, Film, Commerce, Agriculture and Animal Husbandry, Science, Sports, Engineering and Technology and Industry etc. (Chapter 7 Table 7.5)

 

GOVERNMENT PUBLICATIONS

 

          1.10.  There were 41 Government publications, 37 Central and 4 State. Employment News an English Weekly published from Delhi was the largest circulated Government publication with a figure of 5,06,249 copies. (Chapter 5 Table 5.2)

 

REGISTERED NEWSPAPERS

 

1.11.1.     The number of registered newspapers as on 31.3.2006 of which 8512 filed their Annual Statements stood at 62,483 during the year. 2074 new newspapers were registered and four ceased their publication during the year 2004-05.  Hindi language had the largest number (24924) of registered newspapers, whereas Uttar Pradesh topped the states with 9885 newspapers.  Detailed analysis of these registered newspapers can be seen in Chapter X.

 

MISCELLANEOUS PUBLICATIONS

 

1.12.1.         Apart from general newspapers and specialized journals, there were 3850 registered publications, which did not contain any public news or views.  These publications have, therefore, not been included in the general study of the Press-in-India. Chapter XI is devoted exclusively to the analysis of these publications, comprising market reports and bulletins, publicity journals, fiction, school and college magazines etc.

          1.12.2.         Of the 3850 miscellaneous publications only 126 furnished their circulation data, claiming 71,69,952 copies. (Chapter 11 Table 11.7)

 

FOREIGN MISSION PUBLICATIONS

 

1.13.  As on 31.03.2006 twenty-eight foreign missions in India had 111 registered publications.  Majority of these were registered from Delhi and others from metropolitan cities of Mumbai, Kolkatta and Chennai.

 

 

THE PRESS IN INDIA IN 2005-06:  AT A GLANCE (Data compiled as per the annual statements received)
Periodicity	Number	Circulation
Dailies	2,130	8,88,63,048
Tri/Bi-Weeklies	39	5,66,198
Weeklies	3,428	5,05,80,648
Fortnightlies	955	1,23,09,948
Monthlies	1,471	2,11,36,710
Quarterlies	219	15,52,138
Annuals	49	29,86,256
Others	221	27,43,665
TOTAL	8,512	18,07,38,611
�Miscellaneous� Publications	126	71,69,952

A tale of two ‘low’ inflation episodes

http://www.thehindubusinessline.com/2007/11/12/stories/2007111251910100.htm
This article is so vital I am reproducing it in full.

Harish Damodaran

New Delhi, Nov. 11 The annual wholesale price index (WPI)-based inflation rate falling below the three per cent mark for the first time in over five years may please mandarins and analysts, who would see it as a vindication of proactive supply-side measures in conjunction with sensible monetary and fiscal policies.

The 2.97 per cent year-on-year WPI increase for the latest recorded week ended October 27 is the lowest-ever since the 2.86 per cent level of July 20, 2002. The current headline inflation rate has, thus, touched a 275-week low. While that may seem impressive for the habitual number-cruncher or policymaker, it is unlikely to, however, cut ice with the common man.

The reason for the aam aadmi’s scepticism partially lies in the WPI-based inflation not being of much consequence to him, against the more relevant rates derived from the consumer price index (CPI). And here, the numbers reveal a stark contrast. The WPI-based annual inflation during September averaged 3.39 per cent, but the corresponding CPI rates were far higher: 7.89 per cent for agricultural and rural labourers (AL), 6.4 per cent for industrial workers (IW) and 5.74 per cent for urban non-manual employees (UNME).

But isn’t this gap between WPI and CPI-based inflation rates a normal phenomenon? Well, not really so, if one looks back at the previous low inflation period of mid-2002.

In July 2002, the average WPI-based inflation stood at 2.79 per cent, while being 2.27 per cent for CPI-AL, 3.89 per cent for CPI-IW and 3.84 per cent for CPI-UNME. In other words, unlike the present ‘low’ inflation episode, there was very little divergence between WPI and CPI-linked rates.

Then and now

The divergence is, in turn, reflective of the nature of inflation (or lack of it) then and now. The recent inflationary episode has been largely food articles-driven. While the annual WPI increase for the week ended October 27 may have been only 2.97 per cent, hidden within this overall number are corresponding rates of 11.68 per cent for edible oils, 12.92 per cent for tomatoes, 8.27 per cent for milk, 6.10 per cent for rice and, well, 108.76 per cent for onions!

The huge price jump in these essential commodities is better captured in the CPIs, where the combined weight of food is 40 per cent for UNME and 46 per cent for IW. On the other hand, food articles (edible oils and sugar included) have a weight of just 22 per cent in the WPI, which is why the apparently low headline inflation is yet to be ‘felt’ by the consumer.

The difference between mid-2002 and now is that the former period coincided with burgeoning public grain inventories and downward pressure on domestic as well as global commodity prices. As a result, not only was inflation officially low, but the consumer, too, shared this perception.

http://www.incometaxindia.gov.in/ItInformation/CostInflation.asp

1981-82	100
1982-83	109
1983-84	116
1984-85	125
1985-86	133
1986-87	140
1987-88	150
1988-89	161
1989-90	172
1990-91	182
1991-92	199
1992-93	223
1993-94	244
1994-95	259
1995-96	281
1996-97	305
1997-98	331
1998-99	351
1999-2000	389
2000-2001	406
2001-2002	426
2002-2003	447
2003-2004	463
2004-2005	480

http://www.india-briefing.com/article/2007/08/24/notified-cost-inflation-index-financial-year-2007-08.html
“27 2007-08 551” is notified as inflation index for current year.

The economist
http://www.economist.com/world/asia/displaystory.cfm?story_id=8708934

et the government's most pressing need, with GDP growth of 9.2% predicted this financial year (ending in March), is to prevent India's economy from boiling over. Prices for manufactured goods, which have a weighting of 64% in the WPI, have risen by 6.6% over the past year. Wages are soaring; property and financial-asset prices are bubbling; lending to companies and households has increased by 30% in the past 12 months. The RBI will probably have to tighten monetary policy further, in an effort to cool the overheating economy. To sustain India's current growth, longer-term measures, such as cutting subsidies and building infrastructure, are needed. But that takes too long to win the votes of those whose most pressing concern is the price of onions.
http://www.thehindubusinessline.com/2007/02/08/stories/2007020800500800.htm
Are inflation figures the least trusted official statistics?

R. VAIDYANATHAN

Inflation is the talk of the town, yet the government has no reliable data as the price indices either do not reflect the modern milieu or are available with too much lag to be of any real use. Citing the creation of a personal inflation calculator by Britain, R. VAIDYANATHAN suggests that India could consider outsourcing key statistical activity to generate reliable and timely numbers.

The various channels that are desperate for `breaking news' can think of conducting an interesting competition: Identifying the least trusted government statistics. Is it the number of people dead in a riot or the people below poverty line or the inflation figures? My guess is that inflation figures would be the runaway winner.

The Government's Economic Advisory Council, at its recent meeting, expressed concern about inflationary pressures in the economy but is confident that they can be contained and the growth rate maintained. But, without malice, one would like to ask the Government about the numbers over which it is concerned. Indeed, more than the rate of inflation, the unreliable and non-credible numbers are a major embarrassment to the Government and that should be a matter of concern. At the national level there are four consumer price index numbers. These are:

Consumer Price Index (CPI) for industrial workers (IW),

CPI for Agricultural Labourers (AL),

CPI for Rural Labourers (RL) and

CPI for Urban Non-Manual Employees (UNME).

While the first three are compiled by the Labour Bureau in the Ministry of Labour, the last one is released by the Central Statistical Organisation in the Ministry of Statistics and Programme Implementation.

The CPI numbers are considered only partial indices as each caters to a specific segment of the population with different base years. The State-level CPI numbers lack uniformity with the oldest base year being 1939 (for a segment of Bihar). Fewer than 20 States compile and construct an index. Only a few States have base year after 1981-82.

The major concerns and discussions stem from the Wholesale Price Index (WPI) compiled by the Office of the Economic Advisor (OEA) in the Ministry of Industry on a weekly basis based on the price quotations collected by official and non-official agencies.

The main issues pertain to the coverage and the index not reflecting the travails of the common man. For instance, the annual inflation (in WPI) increased to 6.11 per cent on January 20, higher than the previous week's annual rise of 5.95 per cent. The increase is primarily on account of higher prices of manufactured products and food articles — foodgrains (9.46 per cent year-on-year), pulses (21.39 per cent Y-o-Y), fruits (14.50 per cent Y-o-Y), and oilseeds (21.27 per cent Y-o-Y).

Thus, the prices of a plate of two idlis has gone up from Rs 4 to Rs 8 in the last year. That is, for a student or a worker living on his own, the price of just one item of consumption has gone up by 100 per cent. Check the grocery bills, you will see that urad dal now sells at Rs 75 a kg from Rs 40 last year. Easily perceptible is the significant gap between wholesale and retail and critical are the regional variations — for instance, wheat impacts people in the North more than in the South, and so on with different type of dals and oils.

Then, there is the question of weights given to the WPI components. For instance, food items have around 22 per cent weightage in the WPI but it is well-known that they constitute more than 60 per cent of the consumption basket of the vast majority of people. Hence, food inflation hurts hard the vulnerable segments but this is not fully reflected in the WPI, giving the government a cover.

Under-pricing

Another issue is the suppressing of price increase by government decisions or by subsidies, as in the case of kerosene, LPG, or electricity. Under-pricing facilitates short-term suppression but exacerbates the inflationary expectations. In the case of sugar, the government controls it through the PDS (public distribution system) prices and freesale sugar by monthly dispatch orders. Hence, there can be a temporary freeze on the prices of some items to minimise logical rise due to demand-supply mismatch.

The non-inclusion of a number of services in the WPI, especially when the sector constitutes nearly 60 per cent of the economy, distorts the real inflation picture. For instance, doctor's fees have gone up by more than 100 per cent in the last three years as also the cost of education and rentals. Yet, most of these are not reflected in the WPI. The Consumer Price Index for Industrial Workers covers those working in factories, mines, plantations, railways, public transport undertakings, electricity generation and distribution units, and ports. Given the significant changes in the employment scene, especially the larger role of the services sector, including information technology and IT-enabled services, it is only appropriate to completely redefine "industry" rather that hang on to the mid-19th century definition.

Inflation calculators

The UK statistical agency — Office for National Statistics (ONS) — has initiated a novel scheme by which British consumers will be able to work out their own inflation rate. The agency has put up on its web site a personal inflation calculator after insinuations became rife that the official index under-estimates inflation.

The tool will help individual households get an idea of their spending patterns and compare it with the average and the effect it has on current inflation. Interestingly, an ONS survey two years ago found that the inflation figures were among the least trusted official statistics, ranked fourth out of six key measures. The ONS's Chief Statistician argues that "inflation figures are based on the average spending patterns. But every household is different and the way the inflation affects a family depends on how they spend their money."

Will our government statistical agency be enthusiastic in attempting to create such a calculator? It may not be feasible given our state of affairs in collecting and disseminating data. For example, the scheme on Consumer Price Index for Industrial Workers was cleared by the Expenditure Finance Committee in 1996 but the work on it could start only in 1999 due to various administrative reasons (see report of the National Statistical Commission, page 332).

One possibility is to consider outsourcing this important statistical activity to private agencies such as CMIE, with the Government Statistical Commission monitoring the accuracy of the data collection, the sample frame and the interpretation.

The entire process of collection, analysis and dissemination can be left to private agencies. This would result in a more reliable and timely inflation indicator. This should be the first step in gradually outsourcing most of the data series and downsizing the government statistical set-up, particularly at the State-level, which is mostly ineffective.

Else, such important numbers as inflation will not be reliable and the wide divergence between government figures and reality can become politically explosive. The next time a minister wants to know about inflation, the suggestion is just visit the nearest Mahila Mandal on an afternoon. The politician will not only understand real inflation but also learn the method to compute it. That is called practical education.

(The author is Professor of Finance and Control, Indian Institute of Management-Bangalore, and can be contacted at vaidya@iimb.ernet.in. The views are personal and do not reflect that of his organisation.)