Irony would be when India will of Corona free and GDP growth %will be in double digits .Govt will definitely make that number a propoganda for getting votes then for sure. Elaboration
Let the GDP of 19 be 100 now it is 77 for say ,when it will be normal it will be around 95-96(assumption). In numbers it is 22% growth but actual condition is different .
Although that seems a distant dream as we haven't yet (practically) accounted for the informal sector, but it will be politicized for sure! And I feel that's because there is a flaw in the way we measure GDP growth rate. We take the previous year as the base for calculation, so if the conditions improve (hopefully) sometime in FY22, it would be presented as if a recovery from the FY21; though if wee compare it with FY20 levels, that's just going from minus to zero! Moving from worst to worse isn't a comeback! You don't call it a recovery unless you clock a positive growth rate in comparision to the past few years. Probably a better method of calculating base year should be devised, atleast for times of crisis. And govt's credit-taking game has already begun as they have started denoting some pent-up demand in auto sector as (meaningless) v-shaped recovery!
But I feel things might be different this time. Because it's clearly evident what a havoc our Government has created. Even worse affected advanced economies like US and Italy have registered 'less worse' GDP growth rate than ours! People are facing numerous issues and acknowledging that it's gross mismanagement! So hopefully, the political propaganda doesn't work this time around. People need to be aware, and that's our objective as well :)
That's right. But 1 question as the informal sector doesn't account in GDP. How can we include it in GDP calculation. Means what can be the probable procedure that govt can do to include it🤔 . If there is any example of any country doing the same and if yes how?
One possibility may be making grps of the informal sector but definitely it will not be free from flaws as people of less income grp don't reveal their income
Well, I don't know how effective this might be.. but there, certainly, are alternative approaches to make GDP (more) inclusive of the informal sector. I think we should look beyond only income as a measure of GDP. There are alternative methods to do that like consumption. One such approach, as far as I know, is the Italian. They account for informal sector from labour input data. And I think that is a better measure than proxy of the formal sector. Especially because ours is more kind of a labour-intensive economy and in times of crisis, that's what is ultimately the most affected. And that too will be effective only when that's done in the ground-zero, for eg: along with population surveys of households or other kind of independent surveys. Because household labour data will be better than the enterprise-level. As you mentioned.. making groups would also work but then we may have to devise various approaches for each branch, as in quantity and price for agri, expenditure data for construction, etc. However, I feel labour data would still be a better measure than others and by that, I think we might atleast capture some idea about the state of informal economy.
By the way, GDP could also be considered along with other measures to make it more representative, like Human development index, Gross national happiness, etc
Irony would be when India will of Corona free and GDP growth %will be in double digits .Govt will definitely make that number a propoganda for getting votes then for sure. Elaboration
Let the GDP of 19 be 100 now it is 77 for say ,when it will be normal it will be around 95-96(assumption). In numbers it is 22% growth but actual condition is different .
Although that seems a distant dream as we haven't yet (practically) accounted for the informal sector, but it will be politicized for sure! And I feel that's because there is a flaw in the way we measure GDP growth rate. We take the previous year as the base for calculation, so if the conditions improve (hopefully) sometime in FY22, it would be presented as if a recovery from the FY21; though if wee compare it with FY20 levels, that's just going from minus to zero! Moving from worst to worse isn't a comeback! You don't call it a recovery unless you clock a positive growth rate in comparision to the past few years. Probably a better method of calculating base year should be devised, atleast for times of crisis. And govt's credit-taking game has already begun as they have started denoting some pent-up demand in auto sector as (meaningless) v-shaped recovery!
But I feel things might be different this time. Because it's clearly evident what a havoc our Government has created. Even worse affected advanced economies like US and Italy have registered 'less worse' GDP growth rate than ours! People are facing numerous issues and acknowledging that it's gross mismanagement! So hopefully, the political propaganda doesn't work this time around. People need to be aware, and that's our objective as well :)
That's right. But 1 question as the informal sector doesn't account in GDP. How can we include it in GDP calculation. Means what can be the probable procedure that govt can do to include it🤔 . If there is any example of any country doing the same and if yes how?
One possibility may be making grps of the informal sector but definitely it will not be free from flaws as people of less income grp don't reveal their income
Do u have any views or research on this?
Well, I don't know how effective this might be.. but there, certainly, are alternative approaches to make GDP (more) inclusive of the informal sector. I think we should look beyond only income as a measure of GDP. There are alternative methods to do that like consumption. One such approach, as far as I know, is the Italian. They account for informal sector from labour input data. And I think that is a better measure than proxy of the formal sector. Especially because ours is more kind of a labour-intensive economy and in times of crisis, that's what is ultimately the most affected. And that too will be effective only when that's done in the ground-zero, for eg: along with population surveys of households or other kind of independent surveys. Because household labour data will be better than the enterprise-level. As you mentioned.. making groups would also work but then we may have to devise various approaches for each branch, as in quantity and price for agri, expenditure data for construction, etc. However, I feel labour data would still be a better measure than others and by that, I think we might atleast capture some idea about the state of informal economy.
By the way, GDP could also be considered along with other measures to make it more representative, like Human development index, Gross national happiness, etc
Hope I answered you to some extent.
👍🏻 good research ...
Thank you so much :)
Worth reading 👌👌 .loved the fancy name "the almighty's endeavor" 😂😂
Haha. Glad that you found it to be worth. Thank you :)