Thread by @GorwayGlobal

Thread.
On GDP Growth.
One of the 86 times #PMModi cheered @nsitharaman's budget speech was when she said that it "took 55 years to get India to a 1-trillion-dollar GDP, BJP added another trillion in just five" 1/n

Lets Look at the actual record. here are some data from the World Bank, a source much quoted in the #EconomicSurvey2019 written by new CEA @SubramanianKri . The record shows that India outpaced the world since 1985. 2/n

So where is the discrepancy? @nsitharaman's implied, much to her boss' loud and hearty approbation, that India did very badly until the BJP came along. Was she lying, was she deliberately disingenuous, or was she merely ignorant? I dont think she was lying, no... 3/n

There are 2 sources of confusion here.
1. We are talking here about 'nominal GDP' i.e GDP at current prices. Inflation plays a big part here. We are not vastly richer in 2018 than in 1960 (many billions are still mired in poverty) bec a 2018 $ buys less than a 1960 $. 4/n

2. Many people dont get the difference between PROPORTIONAL growth and ABSOLUTE growth. What @nsitharaman said may have been true in absolute terms (in fact the last trillion was added between 2010 (1.676 trn) and 2018(2.726 trn). But RELATIVE rates are what really matter.. 5/n

Consider America, GDP 20 trillion $$ in 2018. If it grows by, say just 3% it would have added 670 billion $$. Now take Belgium, GDP 530 billion. Even if it grew by 5% it would have added 26.5 billion.
Is America's 670 bn absolute growth really better than Belgium's paltry 26.5?

Simply put for the same percentage growth rate, the absolute additional growth is bigger if you start from a higher base value. That is simple arithmetic. To ignore the base line in comparisons of growth is mathematically naive. 7/n

In fact between 2004 and 2014, India did very well, handsomely outpacing world GDP growth rates. This was also the years that saw massive reductions in the most glaring egregious forms of poverty. 8/n

CONCLUSION. @nsitharaman was either disingenuous or ignorant when she made her claim about the last trillion dollars.
And in this entire tweet thread I haven't even touched on the irrelevance of gross GDP numbers to ordinary people. What really matters is #GDPperPerson.
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