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Rethink GDP concept

Rethink GDP concept
Highlights

India hopes for 7.5 per cent growth rate.  But, the United States dismisses it as overstated. Critics of India’s high GDP refer to the faulty or revised methodology responsible for inflated numbers. But, the fundamental rethinking should be on how far the GDP as a concept is worth measuring the living conditions of the people. 

India hopes for 7.5 per cent growth rate. But, the United States dismisses it as overstated. Critics of India’s high GDP refer to the faulty or revised methodology responsible for inflated numbers. But, the fundamental rethinking should be on how far the GDP as a concept is worth measuring the living conditions of the people.

Otherwise, the world continues to be obsessed with the GDP fundamentalism that has gone berserk in India too after its integration into global economy. It all began in 1930s when the world confronted global recession.

The GDP was calculated primarily to assess the capacity of any economy to produce goods and services. But now it is portrayed as economic sanjeevani. The GDP can’t remain the lodestar of the economy.

Sooner it is the better for India to come out of this growth chimera, and rejig the method to measure people’s lives. Concepts like Gross Human Happiness, Human Development Index, Gender Development Index etc., are already gaining credibility.

The Economist reported that the Nigeria’s GDP shot up by a whopping 89 per cent in 2014. Such wild inaccuracies expose the farce in the statistical conception. The ever-widening inequalities make the GDP a grossly inefficient measure to judge the living conditions of people.

This is not to summarily dismiss the GDP as an economic concept. It is certainly a better indicator of levels of production in an economy. But, as what is produced is not always equally shared, the GDP cannot explain the quality of life in any better manner. The GDP is gender-insensitive as it cannot capture the unpaid work at home, the sector in which Indian women largely contribute.

Development cannot always be quantified to constitute GDP numbers. For instance, the ability to think rationally, express creatively, participate in decision-making, transactional freedom that offers choice of consumption, access to social safety nets that provide protective freedom etc., may not be reflected in the GDP calculations, but they constitute significant ingredients of quality of life.

Material prosperity alone will not provide us with happiness in life. The society free from conflict, ecological degradation, cultural decay etc., will be a better place to live in rather than a country with very high GDP figures alone.

The dominant paradigm of quantification has already played intellectual havoc with the poorer and low income nations. Several intangibles like skills, creative talent, levels of innovation in the society, moral fabric, etc., are perhaps much more important aspects to value than mere levels of production counted in numbers.

The GDP is merely defined as value added in an economy, adjusted for inflation. But, quality adjusted measurement is a more qualitative concept. No single measurement of the economy can tell the story in its entirety.

Policy planners should therefore relinquish obsession with GDP and take it in its limited spirit. Google, Facebook or YouTube etc., constitute a large chunk of human consumption today. But, they do not figure in GDP as the users do not pay the cost.

But, can we say that no value is added due to their penetration? Measure the life in its complete perspective to avoid optical illusions of development.

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