Doubting India’s GDP

Typically I’ve picked on China (whose own government leaders don’t use their own GDP to assess their own economy) or Greece (whose top economic statistician fled into exile after he announced weak numbers) or the defunct Soviet Union (because the CIA accepted their inflated internal GDP estimates at face value for decades) or Iraq (where Hussein infamously dismantled most of the GDP measurement capability not long after taking over) … because these places have been in the news.

Now comes India, where a political party with strong affiliations with the dominant religion, has been in power for 5 years. And it seems to have regularly modified the numbers to make them look better than they are.

… This most basic of economic indicators has become controversial in India. In recent years it has been repeatedly reworked and recalculated, usually in ways that made growth look better …

…

“At this point, I think very few people know what to make of the official GDP numbers,” said  Milan Vaishnav, director and senior fellow of the South Asia Program of the Carnegie Endowment for International Peace. “Privately, economists have confided that they are discounting Indian growth by as much as 1-2 percentage points.

…

In election speeches the leaders …  say expansion has accelerated under their watch to become the world’s fastest growing large economy, surpassing France in GDP girth to become the world’s sixth largest after the U.S., China, Japan, Germany and the U.K.

All those quotes are from "It’s Official: India’s Economy Did Better Under Modi, If You Trust the GDP" in the February 28th issue of The Wall Street Journal.

Wherever India sits in the rankings right now, this is the country that will have the largest GDP in the world before you retire. It would be desirable if they developed a reputation for honesty before that time.