Gross domestic product: Grossly inadequate as a measure of well-being

Subscribe to enjoy similar stories. The statistics ministry recently released a bunch of fresh data-sets related to India’s gross domestic product (GDP) across three years, including a guesstimate of expected economic growth for the current year ending on 31 March.

These data-sets managed to generate the usual commentary, controversy and divided opinions about the state of India’s economic well-being, despite a newly elected president halfway across the world stealing some of the thunder. It might be time, though, to start talking about whether it is proper to lavish so much undivided attention on these data estimates, look at whether the numbers capture the reality of lived experiences, examine alterations or enhancements, and examine the progress of the Beyond GDP movement which many countries have adopted.

Given India’s rich legacy of formal statistical research and analysis, this could be another opportunity for Indian statistical institutions to break new ground. This merits discussion because an obsession with GDP as the sole indicator of all that is good and bad in an economy, coupled with the rhetoric and shrill observations accompanying it, has made GDP calculation an extraordinary statistical exercise.

GDP growth is undoubtedly a vital piece of information, but it is still a single piece in a large jigsaw puzzle. The statistics ministry provides a detailed note on the methodology adopted for compiling quarterly GDP numbers—from both expenditure and production approaches, as well as in current and constant prices.