The Indian government and public never get tired of bragging about their economy’s size, and it’s growth rate. For example,
India’s economic growth is estimated to surge past most initial private and official forecasts, backed by robust domestic demand and government spending, helping New Delhi cope with punitive U.S. tariffs.
The near $4 trillion economy is expected to grow 7.4% in the fiscal year ending in March, the National Statistics Office said on Wednesday, above the government’s initial projection of 6.3%-6.8%. (Source)
And this one,
India says it has overtaken Japan to become world’s fourth-largest economy, eyes Germany.
These types of comparisons with developed countries like the USA or Japan etc., are meaningless because of the nature of GDP.
First, looking just at the aggregate GDP numbers hides the real problem of poverty and misery that Indians face. The devil is in the details. If we look at the per capita numbers of India and compare it to other countries we will have the real picture in front of us.
| Rank | Country | Real GDP per Capita (USD, approx.) |
| 1 | United States 🇺🇸 | ~$76,000–80,000 |
| 2 | Australia 🇦🇺 | ~$55,000–60,000 |
| 3 | Germany 🇩🇪 | ~$50,000–55,000 |
| 4 | Canada 🇨🇦 | ~$50,000–55,000 |
| 5 | United Kingdom 🇬🇧 | ~$50,000–55,000 |
| 6 | France 🇫🇷 | ~$45,000–50,000 |
| 7 | Japan 🇯🇵 | ~$40,000–45,000 |
| 8 | China 🇨🇳 | ~$15,000–18,000 |
| 9 | Russia 🇷🇺 | ~$10,000–12,000 |
| 10 | Mexico 🇲🇽 | ~$10,000–12,000 |
| 11 | Brazil 🇧🇷 | ~$9,000–12,000 |
| 12 | Sri Lanka 🇱🇰 | ~$3,500–4,500 |
| 13 | India 🇮🇳 | ~$2,600–2,700 |
| 14 | Bangladesh 🇧🇩 | ~$2,500–2,800 |
| 15 | Pakistan 🇵🇰 | ~$1,400–1,800 |
(Source: Generated using ChatGPT)
India is nowhere near the developed OECD countries, and way behind its rival China. India’s comparison is only meaningful with China because of their similar common denominator of pretty much the same population size. China has done way better with that same population than India. Indian per capita income is even less than its smaller neighbors like Sri Lanka and Bangladesh, too.
Per capita income is a better indicator than aggregate GDP numbers, but it still hides the level of income and wealth inequality in India. Because per capita figure is an average figure, it doesn’t talk about the distribution of income among its population. When we dig even deeper into GDP numbers, the situation of India becomes even more grim.
Let us remove the income of billionaires like Adani or Ambani and see how much the per capita income of India comes down. Indian GDP is roughly 4 trillion dollars while billionaires total income is roughly 1 trillion dollars. Removing this from GDP will reduce GDP to 3 trillion dollars. If we calculate per capita income of Indians excluding billionaires then the per capita income comes down to around 2100 US dollars.
Next we will remove the income of millionaires too. Indian millionaires have roughly 1.5 trillion dollars. If we remove this too from Indian GDP then the GDP drops to around 2 trillion dollars, and per capita income drops to 1000 dollars! This puts India among the poorest of the poor countries of the Sub-Saharan and Central Asia e.g., Rwanda, Sudan, Togo, Tajikistan, etc. India should be comparing itself to these countries and not countries like the USA or Japan.
Next we will do some back of the envelope calculation about how many years India will take to reach the levels of per capita income reached by developed countries.
For starters, it will take roughly 50 years for India’s per-capita income to reach the current (2025) US level if India grows at 7% per year and the US remains static. And, India would take about 144 years to reach today’s U.S. per‑capita income ($85,000) if India grows at 7% per yea, and USA grows at about 4.5% per year (its approximate nominal per‑capita income growth over the past decade).
And, India catches up with Japan in about 48 years if India grows 7% and Japan 1%. India catches up with Germany in about 62 years if India grows at 7% and Germany 2%.
With population of around 1.4 billion people, the Indian economy would have to be of a size of around 122 trillion dollars to reach the present standard of living of the USA. That is never going to happen.
As the original news from India said, most Indian GDP growth is coming from government expenditure. There is very little to no contribution of the private sector. Those economists and lay people who are well aware of the problems of Keynesian economics know that including government expenditure in GDP calculation is a big error. What government spends, it takes away from the private sector. It crowds out private investment. By definition, government expenses are useless projects that waste societal resources. They stifle the economy, not grow it.
Instead of bragging about heavily manipulated and inflated monetary numbers of GDP, Indian politicians, news media, intellectuals, and lay people should worry more about the fallen state of their country. A country which cannot provide necessities of life like clean drinking water and nutritious food has no right to talk about GDP numbers. Such bragging is good for political propaganda, but it won’t help Indians in any meaningful way. The country needs to set its priorities clear.
