GDP Growth: Indian economy really growing with 7.2 percent rate? Here is some interesting fact

GDP Growth: For the last several quarters, India has been trumpeting strong GDP growth. It is being claimed that we are among the fastest growing economies in the world. Now the question arises that if our GDP growth is the fastest, then why do the figures of agriculture, manufacturing, infrastructure along with export and import not confirm it. Why is foreign investment not increasing in India accordingly? Why has the life of the common man become difficult? Why is inflation not coming down?

Are the figures of India’s strong GDP growth fake?

Questions have been raised on India’s GDP growth figures for a long time. Ever since the NDA-led government came to power, the opposition and some economists have been accusing the government of manipulating GDP data. They claim that the government is manipulating the GDP figures to show an exaggerated picture.

A visiting professor of Princeton University, America, Ashoka Mody wrote an article last year – India’s Fake Growth Story. In this, he raised questions on the then GDP data. He said that the government is exaggerating the figures only for ‘branding’ before the G20 summit to be held in Delhi.

Why questions are raised on India’s GDP growth figures

GDP (Gross Domestic Production) means the value of all final goods and services produced in a financial year. This value can be calculated in different ways. Two of these include income method and expenditure method. If we talk about the income method, then the income of the economic agent is calculated in it. At the same time, in the expenditure method, the total expenditure made by all economic agents is compared. GDP is calculated in both the ways in India.

If we look ideally, both the figures should be the same, because the income received by someone is the expenditure made by someone else. Now like if you bought vegetables worth Rs 50, then you spent Rs 50 and the vegetable seller got an income of Rs 50. But due to some errors in the calculation and calculation methods, a difference arises. This difference between them is called discrepancy. In some cases, this discrepancy is seen quite a lot in the NDA government.

Industry giants also doubt GDP growth figures

Asian Paints CEO Amit Singla had expressed his doubts on the GDP growth figures just before the Lok Sabha elections 2024. During the earnings call, an analyst asked him why the growth of the paint sector is not matching the GDP growth. To this, Singla said, “You are right that the GDP correlation has really gotten worse this year. I also think that today, I am not very sure about how the GDP numbers are coming.”

At the same time, Nestle India CEO Shankar Narayan did not raise questions about the GDP data. But, after the second quarter results, he said that FMCG companies are suffering due to the shrinking middle class. He said that at present there is more demand for only premium products. This means that the middle class has reduced the purchase of FMCG products, or their purchasing power has been affected.

Why sales and manufacturing figures do not support GDP growth data

Sales of every major sector, from auto sector to FMCG, have been affected. This is a matter of more concern because it is the festive season. People often buy houses, cars or other essential goods during the festive season. But this year auto dealers have a stock of inventory. Car companies are giving huge discounts. Still sales are not increasing. Now they are considering reducing manufacturing. The results of the second quarter of the banking sector are quite frightening. The agriculture sector is also facing many challenges.

Regarding India’s GDP growth, many rating agencies say that it is consumption based growth. This means that people have money in their hands and they are spending it heavily. This is increasing GDP growth. But, looking at the current sales or manufacturing figures of the festive season, it does not seem that this is the basis of India’s GDP growing at a rate of more than 7 percent. Even if the GDP is growing at a rate of more than 7 percent, at least the common people are not getting any benefit from it.