The Myth of the Fastest Growing Economy

While addressing a post-Budget interaction with industry body FICCI, the Finance Minister Sitharaman said, 

India’s economic recovery is going to place it as the fastest growing economy amongst others.

It’s time now for us as Team India to rise. We are at such a juncture where the revival of the economy is very clear…this recovery is therefore going to place India as the fastest growing economy among the larger economies and that would continue even in the next fiscal.

This talk of India being the fastest growing economy in the world is what we hear all the time from the Indian politicians, of whichever party is in power, media pundits, and other state supporters. But how significant is this claim? Does it really matter for an average Indian if his country’s economy is the fastest growing in the world? Let us examine these questions below. 

Figure 1: Top 10 Countries by GDP

Economic growth number per se doesn’t say much about the standard of living of the people in an economy. Instead of economic growth rate, the size of the economy and distribution of its gross product is important. For example, India’s economic growth number can be higher than America’s but that means nothing when the size of the US economy is 15 times bigger than India’s (see figure 1 below for a meaningful comparison). India’s economy is US$ 2 trillion (nominal GDP) while America’s US$30 trillion. At this size, even at a much lower growth rate per annum America is way ahead of India in terms of standard of living of its population. This fact is reflected in the per capita income numbers. While India’s per capita income is US$1927 dollars, Americans are enjoying per capita income of US$63,413 even when their growth rate is less than that of India. Indian economy will have to grow at a rate of hundreds of percentage point for centuries to catch up with the American economic standards. The same goes with China. Chinese economy is seven times bigger than India’s. Chinese per capita income is US$10,434 compared to US$1927 2000 of India. Indians will have to work their guts out to catch up with the Chinese standard of living.  

Not only is talk of India becoming the fastest growing economy of the world hollow but it is also a shameful statement by the finance minister. We should not forget that Indian economic growth was -23% just a few quarters ago because of mindless implementation of lockdowns by the Modi government. No other economy in the world was damaged as much by these lockdowns as the Indian economy was. After this negative GDP number any tiny growth rate number is going to look good on paper, but that doesn’t mean improved living standards for Indians. Once you hit rock bottom low then the only way is up. But that way up is not to be celebrated as fastest growth. That rock bottom low should be lamented because it represents the damage done to the economy. Nirmala Sitharaman’s bragging about India as the fastest growing economy after pushing it at -23% growth rate is like a gambler bragging about winning 500 dollars after losing 5 million!

India’s growth rate number can be higher than that of America’s or China’s but for an average Indian it means absolutely nothing. His life was and is actually more miserable now. Indian economy and society both are going backwards and no amount of manipulated fastest growth number is going to help average Indians as long as it is not going to improve their standard of living. 

And whatever planned growth is taking place in India since its so-called independence is being cornered by a few individuals who are well connected with the statist system. Indian masses still live in a dirt poor conditions. They will continue to live in that condition until they remove the state out of their lives. Until then people are forced to live in a delusion by their rulers that their economy is the fastest growing in the world.