Figures For Fun

A $5 Trillion Economy Soon?

Neeraj Jain

In 2019, Prime Minister Narendra Modi famously envisioned that India would become a $5 trillion economy by 2024–25. Because of the economic collapse of 2020–21, we are now expected to reach this target by 2027–28 or thereabout–according to our Finance Minister in a speech at the Vibrant Gujarat Summit in Gandhinagar in January this year. The Prime Minister’s Yes-men-and-women have been competing with each other in making even grander claims, of India becoming a $10 trillion and a $20 trillion economy in the years and decades to come. NITI Aayog has made a triple jump, and come out with a draft vision document ‘Viksit Bharat @ 2047’ to make India a $30 trillion economy by 2047.

Modi’s friends too are excitedly chirping in unison. Business tycoon Gautam Adani has come up with this gem, “Following independence, it took us 58 years to get to our first trillion dollars of GDP, 12 years to get to the next trillion and just 5 years for the third trillion. I anticipate that within the next decade, India will start adding a trillion dollars to its GDP every 18 months. This puts us on track to be a $25–$30 trillion economy by 2050 ...” Mukesh Ambani has gone one step further, and said that he expects India to become a $35 trillion economy by 2047.

All these flunkeys are also gung-ho about India being the fifth largest economy in the world, and becoming the third largest economy in a few years.

But in an economy with such extreme inequality–India is now among the most unequal countries in the world, with the top 1% controlling more wealth, more than during the British colonial period, while the majority of the population lives on incomes among the lowest in the world–such overall figures have no meaning. The same IMF, which expects India to become a $5 trillion economy by 2026–27, also admits that India had the lowest per capita income amongst all large economies. In per capita terms, the Indian economy is at the 138th position in the world. Being the fifth or the third largest world economy is no consolation to the marginalised.

This limitation of GDP data–that it does not reflect how well the ordinary people are doing–is now admitted even by some of the world's leading economists like Joseph Stiglitz and Amartya Sen. In a study done for French President Nicolas Sarkozy in 2009, these economists called for the adoption of new tools to measure how well the economy is doing, that incorporate a broader concern for human welfare than just economic growth. But let us for the moment keep this aside and consider the claims made by the Modi Government about how well the economy is doing.

In this year’s budget speech, the FM does not make any mention of the country’s projected growth rate for the coming year, or the expected growth rate for 2023–24. The Finance Ministry has not released any Economic Survey for this year, and instead released a booklet “The Indian Economy – A Review” that briefly takes stock of the state of the Indian economy, its journey in the last ten years and the outlook for the economy in coming years. While the earlier Economic Surveys generally adopted a critical approach towards the country’s economy, pointing out its shortcomings, this Review is more of a propaganda document, eulogising the Modi Government’s economic policies of the last 10 years. Regarding GDP growth, the Review claims that the structural reforms undertaken during the past 10 years of the Modi Government “have led to India emerging as the fastest growing economy among G20 economies. In 2023–24, as per current estimates, it is estimated to have grown 7.3 percent on top of the 9.1 percent (FY22) and 7.2 per cent (FY23) in the previous two years.” Since then, the government has further upped the growth rate for this year to 7.6%.

The Modi Government’s passion for claiming India to be the fastest growing economy in the world is not new. It began making these claims during its first term itself. But there are several problems with the Modi Government’s estimates of GDP and GDP growth rates, which raise questions about the reliability of these figures.

The biggest problem with these claims being made by the Modi Government is–it has no qualms about manipulating data to suit its political propaganda. For this, it has proactively destroyed India’s statistical system, which was once one of the best and most reliable in the developing world. It has curbed the independence of the National Statistical Commission, which was originally envisaged as an independent body of experts which would verify and supervise the collection, collation and dissemination of official data, and made it subservient to its wishes. It has pressurised the Central Statistical Organisation (CSO), the body that collects and disseminates data, which is run and staffed by professional economists and statisticians, to blatantly manipulate official data to glorify the economic record of the Modi Government. This manipulation began right from the very time the Modi Government came to power in 2014. Let us take a brief look at Modi Government’s manipulation of the country’s GDP data over the past decade.

Soon after Modi Government assumed power in 2014, the CSO announced that it was changing the base year for all calculations to 2011–12 (from the earlier base year of 2004–05), as well as changing the methodology for calculating the GDP. This magically upped the GDP growth rate by 2 percentage points, making India the world’s fastest growing major economy. The following year (2016), the CSO released another set of estimates, further upping the growth rate figures for the BJP years.

Now, there is fundamentally nothing wrong with re-basing the GDP; this is periodically done. But this time, there were several reasons for doubting the new data series. To begin with, whenever the GDP is rebased, the “back series” is also released immediately, going back to at least a decade or more. This time, what was bewildering was that the CSO for three years did not publish the GDP growth figures for the years prior to 2011–12. Finally, in July 2018, a committee set up by the National Statistical Commission (NSC) presented its estimates of GDP back series based on the new methodology. But to the Modi Government’s dismay, the new back series showed that economic growth during the UPA years exceeded the growth during the BJP years (the new series calculated the average growth rate during the UPA years to be 8.0%, while the average growth rate during the 3 BJP years as per the new series was 7.6%). Despite the NSC being an autonomous body, the Modi Government forced the NSC to trash the report, and the government’s sycophantic statisticians burnt the midnight oil to come up with a new back series that showed a lower rate of growth during the UPA years as compared to the BJP years. (The new data now lowered the growth rate during the UPA years to 6.7%.) This was released to the press in November 2018 by the Niti Aayog vice-chairman–when actually the Niti Aayog has nothing to do with computation of GDP figures, and the data should have been released by the CSO. Clearly, the Niti Aayog had helped the CSO massage the GDP figures. And then, wonder of wonders, in 2019, just a day before the Modi Government released its last budget of its first term, the CSO further bumped up the growth rate data for the year 2016–17 to show that growth for the four BJP years was even higher than earlier projected, at 7.7%.

There were rumblings of disbelief about the new figures. All reports from the ground indicated that the hastily announced demonetisation in November 2016 and then the badly designed GST in mid-2017 had devastated the economy, especially the informal sector. But the new official estimates claimed that India had grown at a whopping 8.2% in 2016–17, and 7.2% in 2017–18 (see Table 1). These figures were simply unbelievable!

Arvind Subramanian, who was the Modi Government’s Chief Economic Advisor from 2014 to 2018, let the cat out of the bag after resigning. In a working paper published in June 2019, he admitted that India’s GDP was overestimated by 2.5 percentage points per year for the post-2011 period, that is, for the five year period 2012–13 to 2016–17. Instead of the reported average growth of 6.9% for these five years, the GDP growth was more likely to be around 4.4%.

There is a limit as to how much you can manipulate data. As the economic situation worsened during the Modi years, the CSO was forced to admit that the economy was slowing down: the GDP growth rate slowed down for 9 consecutive quarters to touch 3.1% for January–March 2020, and for 2019–20 as a whole, the growth rate fell to just 4%, an 11-year low (Table).

This means that the economy had begun sinking into recession even before the corona pandemic hit the economy.

After that, the pandemic struck. The Modi Government’s inept handling of the pandemic led to an unprecedented economic collapse. Official data admitted that the economy contracted by –7.7%.[10] India witnessed perhaps the sharpest absolute drop in GDP among the major economies of the world in 2020–21.

With the lifting of the lockdown, the economy began to recover. Once again the Modi Government’s trumpeters began to proclaim that India’s post-pandemic growth rates are the highest among the major economies–the CSO estimates GDP growth to be 9.75% in 2021–22, 7% in 2022–23 and at 7.6% in 2023–24.

Several mainstream economists have questioned the reliability of the latest figures dished out by the CSO. For instance, in September 2023, Ashoka Mody, a professor of economics at Princeton University, wrote an article in a reputed international publication, accusing the Indian government of conducting a “branding and beautification” exercise on its GDP numbers to make them look better in the run-up to the G20 summit.

In early January 2024, the NSO released the First Advanced Statistics of National Income for 2023–24. In that, it projected the GVA growth to be 6.9% and GDP growth to be 7.3% for 2023–24. Less than 2 months later, in end-February 2024, it came out with Second Advance Estimates of National Income, 2023–24. In this data, the NSO revised the GDP growth rate upwards to 7.6%, while keeping the GVA growth rate to be the same–which makes the upward revision of GDP dubious.

More recently, the well known economist and former Chief Statistician of India Pronab Sen has pointed out another important discrepancy in the data released by the NSO, which indicates that the GDP growth rate is overestimated. According to Sen, private consumption growth numbers correlate very closely with the GDP growth figure. If GDP growth is X percent then consumption growth can at most be 0.5 to 1 percentage points less than X. This means if GDP growth is estimated to be 7.6% for 2023–24, then consumption growth should be at least 6.6%. But official data shows consumption growth to be only about 3% . Sen argues that the only possible conclusion that can be drawn from the fact that the consumption growth rate is less than half of GDP growth is that GDP growth is overestimated.

The Indian economy consists of two broad sectors: the organised and the unorganised. The organised sector produces about 55% of the output, but employs only 6% of the workforce; the unorganised sector contributes to 94% of the employment and 45% of the output of the economy. Of this, agriculture contributes to around 45% of the workforce and 14% of the GDP. The data for the organised sector are produced regularly every year, and so its contribution to the GDP can be accurately estimated. Of the unorganised sector, data for only agriculture is available. For the remaining unorganised sector, which has 99% of all production units and contributes to 31% of the GDP, data is collected only once in five years. In between these years, the unorganised sector’s contribution to the GDP is calculated using growth of the organised sector. The last such survey was carried out in 2015–16; after that, the Modi Government has not carried any such surveys, and also scrapped all other surveys that could have given us factual data about the state of the unorganised sector.

This methodological problem in calculating the GDP is compounded by data deficiencies. Even for the organised sector, only limited data is available. For instance, the corporate sector data representing industry is available only for a few hundred firms. In the case of agriculture, it is assumed that targets set by the ministry are achieved. But that has not been the case in the last few years due to heat or late rains or inability of perishable crops to come to the market during the lockdown and demonetisation, so that it rotted in the fields and agricultural output declined while the government has assumed that it has increased.

GDP Growth Rate Before the Pandemic, 2015–16 to 2019–20 (%)


GDP Growth Rate



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Vol 56, No. 47, May 19 - 25, 2024