GDP doesn’t mean much for economy

Source– The post is based on the article “GDP doesn’t mean much for economy” published in “The Hindu” on 28th September 2023.

Syllabus: GS3- Indian Economy – Indian economy and growth

News– The article explains the issues of overemphasis on growth for measuring the economic well-being of the population.

What are issues related to overemphasis on GPP for measuring the economic well-being of the population?

Just last month, nearly 20 million families sought minimum wage employment through the MGNREGA.

This high MGNREGA demand reflects the economic hardship faced by Indian households.

Some segments perceive economic prosperity. It’s primarily a small, vocal segment of the population. This view is supported by factors like continuous stock market growth, the emergence of billion-dollar startup unicorns.

However, it’s crucial to recognize that this celebration is not representative of the vast majority of the population.

The concern isn’t just about the GDP data. It’s about the concept of GDP being treated as the ultimate measure of overall economic health.

The economic well-being of millions of Indians cannot be accurately captured by GDP metrics. For instance, a fully automated semiconductor manufacturing plant may boost GDP but won’t create substantial employment opportunities for low-skilled individuals.

Contrary to the conventional belief that high incomes for a few will benefit many, this trickle-down effect doesn’t happen.

What is the way forward?

There’s an urgent need for a fundamental shift in our economic discourse and narrative. This transformation must begin with political parties and their leaders, and it should be a bipartisan effort in the nation’s interest.

The focus should shift from headline GDP figures to labour market information. This should be the primary concern for the political leadership, rather than comparing GDP growth during different tenures.