Questions on India's GDP
When India’s GDP numbers were announced for the last quarter, the IMF said those numbers didn’t sound very accurate. Nithin Sasikumar wrote this excellent article on the concerns raised. He put two disclaimers right at the beginning. #1 : “Now I should point out that the IMF didn’t call us untrustworthy. They simply said that we can do better at how we calculate GDP.” And #2 , his post is not about the politics of GDP calculations. Before going into the issues and concerns, he starts by explaining what GDP is, and why it is so important to calculate correctly. Simply put, you take all the economic activities in the country in a year (“sales from IPL tickets in Jaipur, biscuits being sold in Pune, setting up of a new factory in Chennai”) and sum up their values to get the GDP. It gives an idea of the overall state of the economy. It becomes one of the criteria for governments to frame policies, decide what to spend on, how much to increase taxes, and for the RBI to deci...