Do people think that the Indian economy is overvalued?


India has always considered itself to be a great country. When it first became independent in the 1950s, the first prime minister, Nehru, put forward what he called the “ordained great power” theory. In his book “The Discovery of India”, Nehru said that India cannot play a secondary role in the world. India needs to be a major player or it will disappear. He doesn’t think that an intermediate status is possible.

Since then, most Indian governments have inherited Nehru’s idea that India is a great country. India wants to be a powerful country with a voice, so it needs to have a strong political, economic, and military presence. India has long been trying to get permanent membership in the UN Security Council. It has also been buying a lot of weapons from the United States, Russia, France and other countries. India is also trying to make its economy look bigger by changing its GDP algorithm.

But India is not satisfied with this fifth place in the world, so by changing the exchangIn recent years, India’s economic development has been relatively rapid: in 2020, India’s total economic output has surpassed that of Britain and France, thus becoming the world’s fifth largest economy after the United States, China, Japan, and Germany. e rate algorithm to describe itself as the world’s third largest economy after the United States and China. The truth is that countries around the world do not use the same method of calculating total GDP. The production method currently used in China is to calculate the total output of each national economic sector separately and then deduct the intermediate consumption of each sector.

The advantage of this algorithm is that it avoids double counting and useless calculation, and the disadvantage is that it ignores the output value of non-productive services such as medical, education and finance. In fact, when China’s GDP statistics ground stalls, small-scale private transactions of individual households are not counted at all. In this way, China’s GDP according to the production method is only less than our actual economic output. The U.S. accounts for GDP using the expenditure method: total spending on final goods purchased by society as a whole = (personal consumption + personal domestic investment + government purchases + total net exports) – (total imports + labor).

The advantage of this algorithm is that it allows for a more accurate accounting of individual service sector output, but the disadvantage is that it double-counts the virtual economy component. Thus the U.S. accounts for only a little more GDP by the expenditure method than it actually does. India’s GDP statistics are supposed to belong to the production method, but India adds too much of its own ingenuity to the specific accounting. For example, eggs are originally a dollar a piece. If the baseline price of eggs is raised to $3 a piece, does GDP come out? If India produces a domestic car that has to be forced to equal the price of an Audi in the market, does GDP come out?

In India, cow dung is calculated as “green fertilizer” at the agricultural level and “green fuel” and “green industrial material” at the industrial level in the GDP. The Chief Minister of Madhya Pradesh, Shivraj Singh Chouhan, has publicly mentioned in a speech that “cow dung and cow urine can help the country and the states in their economic development”. To justify his statement, the Singh minister said, “From cow dung and cow urine, a range of important substances required for the manufacture of everything from insecticides to medicines can be extracted.”

The reason why India is doing everything possible to make its GDP figures look better is a kind of great power vanity. To achieve its ambitions as a great power, India must have a strong enough influence and voice politically, economically and militarily, but India is not fighting for this influence and voice through down-to-earth efforts.

India is keen to satisfy its vanity by revising and speculating on paper figures. India’s economic clout in the international arena comes almost entirely from the sheer size (not quality) of its economy. India is lacking in every aspect of per capita income, infrastructure, and level of industrialization. India has a long way to go to solve these problems. Instead of thinking about how to solve these problems, Indians are trying to make their economy look bigger by modifying their data. The size of the Indian economy is watered down to make it appear large, but the quality of the Indian economy is not really complimentary.

India is actually a country where the gap between rich and poor is extremely wide: the richest 1% of the population owns more than half of the country’s wealth, the richest 5% of Indians owns 68.6% of the country’s wealth, and the richest 10% owns 76.3% of the country’s wealth. In stark contrast, according to the World Bank, 1/3 of the world’s poor come from India. More than 800 million Indians live on less than $2 a day (less than $13). India ranks 85th in the World Economic Forum’s ranking of 148 countries in terms of infrastructure.

The first impression many people have of India is one of filth and disorder: filthy open-air toilets, streets full of cow dung, polluted Ganges water, and overcrowded trains …… At present, many parts of India still retain the traditional family handicraft mode of production. At present, India has few competitive industrial products in the international arena other than textiles, precious metals and minerals, so that India’s annual trade deficit exceeds $100 billion. It is clear that the quality of the Indian economy is low in terms of per capita income, infrastructure, and industrialization.

India’s economy is really lacking in quality, so India has to start with volume in order to satisfy its own great power vanity. India is, after all, a large country with a population of more than one billion people. Such a country’s economic output is never too small. Even if India’s per capita output and income is low, but the total is bound to add up to a huge number. But it is not enough for India to inject water into its GDP data through various methods. After some watering down, India publicly claims to be the third largest economy in the world after the United States and China.

However, India is still considered to be the fifth largest economy in the world after the United States, China, Japan and Germany. In fact, this fifth position in the world is also obtained by water injection. India’s actual economic output should be behind that of the UK and France (at best, it is the eighth largest economy in the world). And that’s just considering the volume of the economy. If we consider the quality of the economy, then India’s disadvantage is more obvious. India’s economic output is certainly much higher than that of such small countries as Singapore, Israel, the Netherlands and Switzerland.

But I’m afraid no one will therefore conclude that India’s economic development is better than Singapore, Israel, the Netherlands, Switzerland and other countries such as the conclusion. India does not care how odd its behavior is in the eyes of others. As long as India does not feel embarrassed, it will continue to insist on the water injection, and in 2015, shortly after coming to power, Modi proudly declared that he would make India a $200,000,000 economy by 2020 (when India’s economy was about $2 trillion). s GDP to $5 trillion”.

Although the five-year period promised by Modi has not yet arrived, the current situation in India is expected to blow up again. India’s total GDP in fiscal year 2019/2020 is $2.9 trillion, which means that India intends to increase its total GDP by $2.1 trillion in five years. Italy, the world’s eighth largest economy, has not reached a GDP of $2 trillion. But the Indians have also made a serious plan to increase GDP by $2.1 trillion in five years: maintaining GDP growth at 8% and inflation at 4% from FY2020-2025.

An 8% real growth rate combined with a 4% nominal growth rate would give India an annual GDP growth rate of 12%. This would allow India’s GDP to reach $3.248 trillion by the end of 2020. India’s GDP would reach $3.64 trillion by the end of 2021, $4.08 trillion by the end of 2022, and $4.57 trillion by the end of 2023. So by the end of the five-year period (2024), India’s GDP will be over $5 trillion.

All the Indian government cared about was the GDP figure anyway, and how high the inflation rate was during the same period was not even a consideration. This did not seem impossible at the time. But before the 2020 fiscal year came the new crown epidemic: In October 2020, the new crown virus mutant strain “Delta” was first discovered in India and quickly caused the Indian epidemic to get out of control. 2020 Indian economy under the impact of the epidemic not only failed to achieve 8% GDP growth as expected, but also appeared as high as 8%. Instead, it experienced a negative growth rate of up to 7%.

India’s GDP was ahead of the UK’s until the end of the first half of 2020, but by the end of 2020 India’s GDP was overtaken by the UK’s. By 2021 India had gone from being the world’s fifth largest economy to the sixth largest economy.


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