16 PARLIAMENTARIAN l JULY 201901
02
03
04
the desire is to become a
five trillion dollar
economy by 2024 in terms
of the gdp
But economists around
the world disagree with
gdp as an index of the
wellbeing of a country
this would need a
jump of more than 70
per cent from its
existing size
for india, like other nations
with a huge informal sector,
there is a major flaw in gdp’s
calculations
aLaM sriNivas
Alam Srinivas is a business journalist
with nearly three decades behind him,
working for The Times of India, India
Today, Outlook, Financial Express and
Business Today. He is the author of
“Cricket Czars: Two Men who Changed
the Gentleman’s Game”snapshots
P
RIME MINISTER Narendra Modi in his second inning has
successfully sold several new grandiose ideas to the public.
Last month, he pulled a new rabbit out of his economic hat- the desire to become a fi ve trillion dollar economy by 2024,
i.e. a jump of more than 70 per cent from its existing size.
While economists debate about whether this is feasible, and whether the
prerequisite conditions exist for it to happen, there is a crucial aspect that is
being shunned. Is the size of the economy, or its GDP and its growth,
refl ective of a country’s wellbeing – the “health, happiness, security, and
material comfort” of a nation and its people?
Recent research by several institutions such as World Economic Forum
(WEF), Brookings Institution, and McKinsey, among others, concludes that
the answer is a huge NO. According to an article by Robert Constanza (2014)
on the WEF website, “Th e real economy – including all things that support
human wellbeing – is much larger than the market economy estimated by
GDP. GDP was never designed as a measure of overall societal wellbeing and
its continued misuse for that purpose needs to stop.”
According to a recent study by McKinsey, the global think tank, “Perhaps
most important, GDP was not meant to be an anchor metric for targeting
national economic performance or a measure of national wellbeing. For the
latter, there are many alternative measures, including the Human
Development Index (HDI), introduced by the United Nations in 1990, and
the OECD’s Better Life Index.”
A piece on http://www.khanacademy.org mentions two other such indicators - Genuine Progress Indicator, and Happy Planet Index.
Before we get into the reasons why these indices are better than GDP, let’s
economy|gdp