Dr Manmohan Singh, our Prime Minister, reminded recently of the country’s economic security. On the basis of GDP, India ranks at the 10th place in the world. However, when it comes to per capita income the country’s rank is a pathetic 141. We are a rich country with poor people, in other words.
GDP is the sum of all the products and services of a country. If we calculate the sum of the entire amounts spent by the government and the private sector including individuals as well as the savings and earnings from exports and then subtract the sum spent in imports, we will get the country’s GDP for the concerned year.
Interestingly, the GDP will grow when prices rise. When you spend more money on petrol or shopping or medicine, you are raising the GDP of your country. If you wash your own clothes instead of paying a launderer for that, or polish your shoes instead of paying a shoeshine boy, or cook your own food instead of eating at a restaurant or some such place, you are reducing the GDP of your country.
It’s no joke that the GDP of the country will grow when there is a catastrophe like flood or earthquake. Because more amounts will now be spent on reconstruction works and the more you spend the higher your country’s GDP!
Do not complain when the prices of food items rise or when you have to pay huge bills in hospitals. You are raising your country’s GDP.
The USA spends $20 million a year to advertise fast food products. One in four Americans depends on fast food for sustenance. And the GDP of the country grows by $110 million. Furthermore, fast food creates much obesity and the amounts spent on slimming services a year is $30 million to $50 million.
The irony of calculating a country’s economic growth in terms of GDP must be clear by now. Dr Manmohan Singh’s statistics sounds good on paper. But in reality it means little. It does mean that there are some people in India who are well off, better off than desirable, in fact.
The criteria for evaluating a country’s development should not be merely economic. Happiness quotient has little to do with economic statistics.
It should be noted that India’s GDP did not grow with support from agriculture and trade. 56.4% of the country’s GDP comes from the services sector. Agriculture makes a mere 17.2% contribution. Trade: 26.4%. But 52% of the country’s population is involved in agriculture. This is another paradox of GDP.
There’s no doubt that the liberalisation of economy and the policies that go with it have made much contribution to the country’s progress. But everything is not hunky-dory, as our PM wants to make it appear. We need to consider the conditions of the poor and the marginalised more seriously.
Note: I have depended entirely on an article by Saji Cyriac in today’s Deepika (a Malayalam newspaper) for this post. I found the article lucid without the usual jargon that creeps into such writing. Hence I wished to share some of it here.