GDP (PPP) | 2012 estimate | |
- | Total | $4.711 trillion[7] (3rd) |
- | Per capita | $3,851[7] (129th) |
GDP (nominal) | 2012 estimate | |
- | Total | $1.947 trillion[8] (10th) |
- | Per capita | $1,592[7] (140th) |
Population | ||
---|---|---|
- | 2011 census | 1,210,193,422[6] (2nd) |
Low inflation is inflation from 0.00001 to 9.99% per annum. High inflation is from 10 to 25.99% per annum or 26% cumulative inflation over three years. Hyperinflation is cumulative inflation of 100% over three years, i.e., annual inflation of 26% for three years in a row (for everyone in the world excluding Prof. Steve Hanke and a handful of other academics who steadfastly ignore the IFRS definition of hyperinflation followed by millions of accountants worldwide).
Indian year-on-year inflation during 2013
January 11.62%
February 12.06%
March 11.44%
April 10.24%
May 10.68%
June 11.06%
The Argentinean Accounting Federation, in collaboration with the Brazilian, Chilean and Mexican accounting authorities, proposed a new IFRS to the IASB namely Financial Reporting in High Inflationary Economies in 2010 in which they proposed a form of Capital Maintenance in Units of Constant Purchasing Power (restatement) in terms of the monthly published CPI similar to what is unsuccessfully used in IAS 29.
I amended that proposal in January 2012 to use the Daily CPI since comprehensive CMUCPP is only possible with a Daily CPI and not a monthly CPI as unsuccessfully used in IAS 29 Financial Reporting in Hyperinflationary Economies. IAS 29 had absolutely no effect during 8 years of full implementation during Zimbabwe´s hyperinflation because of the use of the monthly CPI - something the IASB refuses to admit.
The IASB now (August 2013) still has to decide first whether it is going to have a research project to decide whether it should have a full-scale project to develop an IFRS for Financial Reporting in High Inflationary Economies. The IASB is currently in a "period of rest" (as they state it) after the first quarter of a century of setting IFRSs.
If the IFRS Financial Reporting in High Inflationary Economies with comprehensive CMUCPP (restatement) in terms of a Daily CPI as from the inflation thresholds as suggested in the Argentinean Proposal, namely as from annual inflation of 10% per annum or from 26% cumulative inflation over three years, were already authorized, then India would CURRENTLY be REQUIRED in terms of IFRS to implement the new IFRS (comprehensive CPMCPP) in terms of a Daily CPI.
This would stabilize the Indian constant real value non-monetary economy over a very short period of time as India would be required to abandon the Historical Cost Accounting model and with it the stable measuring unit assumption, never to go back to it again.
India does not need the currently draft-only IFRS Financial Reporting in High Inflationary Economies to stabilize its constant real value non-monetary item economy in terms of a Daily CPI because capital maintenance in units of constant purchasing was authorized 24 years ago at all levels of inflation and deflation (including during low and high inflation) as an option to Historical Cost Accounting in IFRS in the original Framework (1989), Par. 104 (a) [now the Conceptual Framework (2010), Par. 4.59 (a)] which states: "Financial capital maintenance can be measured in either nominal monetary units or units of constant purchasing power."
India is thus currently authorized in IFRS to implement comprehensive CMUCPP in terms of a Daily CPI and therewith to stabilize its constant real value non-monetary item economy over a short period of time. India would never do it no matter what the enormous benefits would be simply because India is NOT REQUIRED to do it: it is AN OPTION in IFRS to India and India would not make that option.
Technical Issue: India does not issue government capital inflation-indexed bonds and thus does not currently have an official Daily CPI like all countries which do issue sovereign capital inflation-adjusted bonds. That is a very small technical issue. A Daily CPI can be set up in a few hours using the generally accepted Chilean Unidad de Fomento formula for that purpose (Shiller 1998).
Nicolaas Smith Copyright (c) 2005-2013 Nicolaas J Smith. All rights reserved. No reproduction without permission.
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