Insights from the Economic Survey 2011–12-Prices and Monetary Management

The newspaper editions of tomorrow and dayafter will be filled with analysis and insights as people try to decipher the numbers and read the tea leaves, for both the Economic Survey and the Union Budget. However, this blogpost aims to capture the nuggets mentioned in the 14 chapters of the budget(which I did read today!), and does not claim to be exhaustive given the huge data overload! Anyways, here goes for Chapter IV(normal text is from the survey, bold text is mine) which can be read at this link
http://indiabudget.nic.in/es2011-12/echap-04.pdf There was plenty of other data, but only two pieces I found insightful in this chapter

1. Limitations of 'core manufacturing inflation'-example of cotton industry- ). The reason that 'core manufacturing inflation' occupies importance is because it is thought to be less prone to supply shocks and a more accurate gauge of demand side pressures. But even even traditional 'core' manufacturing inflation is not without large 'supply-side' shocks from world markets in key manufacturing sectors in India (and other emerging countries); accordingly, we need to be appropriately cautious about unhesitatingly using traditional developed country theories and measures of demand-side pressures as causes of core inflation..the cotton textiles industry example is given in the survey and the box below is informative.
2.  Residential price bubble not necessarily in the metros as feared The NHB RESIDEX is an Initiative of the National Housing Bank (NHB) to provide an index of residential prices in India across cities and over time.The NHB RESIDEX now covers 15 cities and is updated
   and released on a quarterly basis with 2007 as base year. It has been updated and released for the quarter ended December, 2011 (October - December 2011).