'Back of the Envelope' Calculations

Indian GDP Estimates Regressed (back of the envelope calculations)

Estimated for the next 2-5 years horizon

India’s GDP’s Growth Estimate:

= 7.5 % 

+ .5 (Direct Tax Code) 

+ .5 (GST Implementation) 

+ .5 (Deregulation of Oil)

Explanation

Indian GDP (an independent variable) can be estimated by a multiple regression model based on three dependent variables – Direct Tax Code, GST Implementation and Deregulation of Oil. The intercept is taken to be 7.5 (present GDP growth rate under normal conditions), slope is estimated to be .05 for all three dependent variable is a very general manner (just to highlight the level of significance the independent variable have on the dependent variable - GDP growth rate).

Parameters of Independent Variables 

(defined – remember, its back of the envelope calculation – without any sound research to support the hypothesis)

Direct Tax Code              
= 1 (If Implemented)
                                      
= 0 (If Not Implemented)
                                        
= -1 (If corruption index increases)

GST Implementation       
= 1 (If Implemented)

                                        
= 0 (If not implemented)

                                        
= -1 (If fiscal consolidation not initiated in the next one year)

Deregulation of oil            
= 1 (If recommendations accepted)

                                        
= -1 (If not accepted, in the next one year)

                                        
= -2 (If oil prices cross USD 100/ per barrel)