India just announced that growth in gross domestic product (GDP) stood at 7.3 percent during the fiscal year April 2014 – March 2015. This will be seized upon by some as world-beating, even ahead of China’s. It will be heralded as a sign of India’s global economic rise. In fact, it may be fairly meaningless.
The first reason for this has to do with India. The country recently altered its approach to GDP, leaving the previous totals for GDP almost unchanged yet somehow finding much higher growth over the last few years.
By itself, this seemed odd. GDP growth also clashed with almost every other indicator over the same period, leaving many observers doubting the accuracy of the revisions. For example, the manufacturing component of GDP shows strong growth, while the government’s own industry indicator does not.
Moreover, India’s economic statistics are often dubious. Striking revisions are not limited to GDP, and the reasons behind the changes can be remarkably amateurish.
The country releases multiple inflation rates every month but has no equivalent for unemployment, though unemployment and underemployment are vital challenges as young workers flood into the labor force. The new GDP series is said to be a long-overdue modernization. Much more work along these lines is needed.
The second problem is with GDP itself. It’s not just India’s numbers that provoke suspicion. Any GDP growth comparison to China is stacking one unreliable number up against another. Beijing is frqeuently unwilling to tell the truth about its economy and Delhi is frequently unable to.
Even in the U.S., the relevance of announced GDP growth is dubious. If GDP is used as the guide, the recession associated with the financial crisis ended in mid-2009 and the American economy has been expanding at an uneven but reasonable pace for almost six years.
But income and the job market tell a gloomier story, of a slow and still incomplete rebound. In America, India, and everywhere else, it’s how people are actually doing that matters, not how GDP says they should be doing.
In the Indian case, though we don’t know for sure, the supposedly rapid GDP gains do not seem to have created a large number of jobs or brought an increasing number of people out of poverty. They do not even seem to be helping curb the large budget deficit.
So when you hear that Indian GDP is showing powerful growth, the first question to ask is whether that’s really true. The second question may even be more telling: why, exactly, should anyone care?
Follow AEIdeas on Twitter at @AEIdeas.
from AEI » Latest Content http://ift.tt/1EEfFWl
0 التعليقات:
Post a Comment