THE TRUTH ABOUT INDIA-CHINA GDP GROWTH

There was a wise and wizened construction supervisor. His job was to supervise the excavation of ground before a high-rise building came up on the spot.  He stood in the sun, rain or biting cold, and guided the excavation. At the end of the day, he would have the length, breadth and depth of the excavation carried out, and write down the amount of earth removed in a printed form.  The quantity, say, was 4,700 cubic feet.

Then the old man was replaced by a young one. He got made a few baskets measuring a certain volume by a local carpenter. At the end of the day, the young supervisor would have the workers stay back on over-time wage and have all the dug-out soil measured with the baskets. The output showed 7000 cubit feet, which he wrote down with a flourish on the printed form.

7,000 cubic feet of loose soil was a more impressive figure seen against 4,700 cubic feet of  soil packed tight by mother earth.

Everybody praised the young supervisor’s performance. 7000 against 4,700 was no mean achievement, they said. The company went to town praising the new supervisor. The old one resigned in disgust.

I know that this story is true. The wise and wizened supervisor was my uncle.

Just as true is the  story of sudden rise in India’s Gross Domestic Product from 4.7 percent to 7 percent.

Earlier, the value of products was computed by their costing value – cost of materials, labour and overhead that went into production. A new flock of statisticians decided  (or agreed to please the new dispensation) to compute the value by the sale value of the same products – value arbitrarily  fixed by the manufacturers, profit take by the wholesalers, transport cost, Retailer’s profit, income tax – all unproductive expenses added the product.

Lo and behold, a meagre 4.7 percent became 7%.

The falsehood doesn’t end there.

India’s GDP growth by the new reckoning  this year is 7.3%, while China’s is only 7 %. Let us concede that both countries measure the GDP by the retail value. India is outgrowing China, the Government tells the media. Media gets excited, calls a panel meeting.  Most  of the panelists thump their tables at the marvellous jump. The lone conscientious objector’s voice is drowned by the moderator’s imprudent  interruption.

Now switch off the television and look at the real figures. Rounding off for convenience, China’s annual GDP is 12 trilliion – 12,000,000,000. India’s is  3 trillion – 3,000,000,000. In other words, China produces four times what India does for populations of comparable numbers. When China grows by 7% of that 12,000,000,000 , its new production is worth 12,840,000,000 US Dollars.

Indian GDP grows by 7.3% of 3,000,000,000. That is, this year it produces 321,900,0000 US Dollars. India’s growth is nearly a quarter of China’s in real terms.

To grow as much as China did  this year, India needs to grow nearly 4 times as much as China did – that is , a 28% growth just to catch up with the increase in growth – not with the total GDP. At a mere 0.3% additional growth (conceding the claim to be true), the economic gap has only widened.

In other words, at this rate of growth, India  might never catch up with a country that still has its poor.

Window dressing looks good. Sadly, it can’t clothe nor feed  the man in rags peering in with great hope.

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