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Economy

A Look at the Real Growth Figures Amid the $4 Trillion GDP Hoax Story

The news of a strong GDP can influence public perception and confidence that the ruling government is effectively managing the country's economy. But let's take a look at the real growth story.

New Delhi: Earlier this week, social media was abuzz with the news that India’s GDP crossed the $4 trillion mark – although there wasn’t any official confirmation of this achievement.

A screenshot claiming India’s GDP crossed $4 trillion was taken from a YouTube channel, according to news reports. The channel, LiveStream07, claimed that it collated real-time GDP data from the International Monetary Fund (IMF).

The IMF, however, told BOOM that this is incorrect because they do not collate real-time GDP data.

Economists have also said that the Union government’s National Statistical Office is the only official source of data.

The numbers for the July-September 2023 quarter will be released on November 30.

Bharatiya Janata Party (BJP) leader Devendra Fadnavis tweeted saying: “This is what visionary, dynamic leadership looks like! That’s what our New India progressing beautifully looks like! Congratulations to our fellow Indians as our Nation crosses the $4 trillion GDP milestone! More power to you, more respect to you Hon PM @narendramodi ji!”

D. Purandeswari, BJP’s Andhra Pradesh president, said, “Congratulations BHARAT on becoming a 4 Trillion Dollar Economy ! This phenomenal achievement has been made possible by the path breaking reforms introduced and implemented by Prime Minister Shri @narendramodi ji government in the last 9.5 years.”

Billionaire Gautam Adani tweeted saying: “Congratulations, India. Another two years to go before India becomes the 3rd largest nation in terms of Global GDP by overtaking Japan at $4.4 trillion and Germany at $4.3 trillion. The Tricolour surge continues! Jai Hind.”

Claims and promises are commonplace in the rhetoric of governments, particularly in the run-up to elections. For example, the assertion that India will become a $5 trillion economy by 2024-25 is a focal point in the media, with leaders of the ruling BJP proudly championing it as evidence of the growth and development promised by the Narendra Modi-led administration.

Also read: Understanding GDP Growth Through Discrepancies and Why the Major Push Is Not Visible

But why boast about a growing GDP?

Highlighting a growing GDP is a way to showcase economic success during the current government’s tenure. It suggests that policies and governance have contributed to a robust and expanding economy.

A growing economy is often associated with job creation. A rising GDP could convey that the government’s policies have led to increased employment opportunities. And this could be a crucial factor for voters.

Therefore, such claims could help establish a growing confidence and a sense of stability among the voters, a crucial aspect for any citizen to vote for a party.

A strong GDP also attracts domestic and foreign investments, showing that the country is economically viable.

Basically, the news of a strong GDP can influence public perception and confidence that the ruling government is effectively managing the country’s economy.

Also read: The Hollowness of the Modi Government’s Tall Claims and Self-Praise on Economy

The real growth figures

Former Reserve Bank of India governor Raghuram Rajan has said that the Union government’s goal to make India a $5 trillion economy by 2024-25 was “more aspirational than a carefully computed one”.

Moreover, who will gain if India reaches the $5 trillion economy mark in 2024? Will a $5 trillion economy or a good income and job matter to ordinary Indians, belonging to the lower, lower-middle, and middle class?

It is crucial to address the employment needs of the country’s youth. According to Rajan, India’s economy needs to grow by over 8% to meet the job demands of its vast population.

The Periodic Labour Force Survey (PLFS) data, for July 2022 to June 2023, showed that a significant number of individuals in India are engaging in self-employment or unpaid labour. It also said that India’s unemployment rate has reached a six-year low, standing at 3.2%. 

So, is unpaid labour boosting India’s employment figures? As many as 57.3% of the workers are now self-employed. This share was 52.2% six years ago.

While India is one of the fastest growing economies in the world, it is also one of the most unequal countries, with rising poverty and an ‘affluent elite’.

Premium car sales surge, but entry-level vehicles find fewer buyers; cookie demand grows, while biscuit sales slow; and India is turning into a magnet for luxury brands, but FMCG (fast moving consumer goods) sales are undergoing a slowdown – these are telltale signs of a K-shaped, or an uneven, economic recovery.

Apart from economic issues such as high inflation and crony capitalism, mental health, majoritarian politics and press freedom also impact the overall growth of the economy.

A Deloitte report estimated that Indian companies could suffer a loss of $14 billion a year due to poor mental health among employees. A psychiatrist had told TOI that many Indian psychiatrists are moving abroad for “greener pastures”. And that’s leading to a shortage of psychiatrists in this country.

Note that India has 0.75 psychiatrists per 100,000 population. The desirable number is anything above three psychiatrists per 100,000 people.

Economist Jayati Ghosh, in a paper titled Hindutva, Economic Neoliberalism and the Abuse of Economic Statistics in India, explained how the Narendra Modi government’s efforts at implementing the Hindutva agenda adversely affect economic activity.

The Wire had reported in April 2021, that a year after the 2019 Delhi riots – which killed 53 people – Muslim families were selling homes and moving out of Northeast Delhi. They sold their houses at low prices – at least 25% below market rates.

The PLFS report highlighted that among the major religious groups, only Muslims have experienced a decline in their labour force participation rate and worker population ratio.

Separately, there is evidence to support that attacks on press freedom – such as jailing journalists, raiding their homes, shutting down printing presses, and using colonial laws to arrest reporters – have measurable effects on economic growth.