ALLIANCE FO§ DEMOCRACY

India’s GDP growth is miraculous

India has long been viewed as one of the most densely populated and poorest countries in the world. Neither aid nor the dot.com boom have done anything to change this image. India was simply less concerned about this image than about continuously being the loser among the giants of Asia. The solution that the Indians came up with has set a trend and is surprisingly European, although India can be better compared to its giant competitor, China, and not so much to Europe, which has been unable to generate any more growth regardless of the method of calculations. The Indians new calculation method made them richer. It was very simple: With the new method, India is almost growing as fast as China. Gone are the days of unseemly grumbling. The gross domestic product of Asia’s third largest economy increased by 6.9 percent in 2014, not the 4.7 percent calculated using the completely obsolete method. China’s economy grew by 7.4 percent in 2014 (according to the Frankfurter Allgemeine Zeitung ). We really don’t want to know how much this growth would be if it were calculated using India’s new method.
Now, we’ll have to see how long the ego of the leading power in Asia can handle this game, as the World Bank predicts 7-percent growth in 2017 for India (according to the new method), and 6.9 growth for China. This makes India look good on paper. It has apparently done its homework and, as is customary in the world, anticipates market prices instead of factor cost in calculating growth, and does this over longer periods of time.
Europe and the U.S. manage to cheat more growth for themselves this way too. The suspicion that the Indians are also ignoring the actual debt, expenses, or taxes from the treasury that should be allocated to the debit side of nominal GDP was dismissed by the Ministry of Statistics, since the country’s audit was not found to be a trend in the sector calculation. This sounds as incomprehensible as it is feasible, since the Germans work it out so that economic aid, bailout funds and other obligations (implicit debt) are not even recorded in the budget. This is how Germany is able to report – supposed - fat surpluses. At least India is able to reduce its debt ratio in this way. Oh, how the German state coffers have filled up over the years. Based on the old calculating method, India’s economy grew 5.3 percent in the fourth quarter of 2014. That, of course, is not enough to bolster its debt-free image. It was helpful that the prime minister brought the new method with him to the office. It can be assumed that Narenda Modi heard about it in Europe. A little sleight of hand can turn cloudy skies blue – in that sense, we’ve got to hand it to the Indians.
We don’t deserve the infinite blue skies that the political parties and the ECB have presented to us, and we are probably envious of these methods of calculating growth. India should be happy that it now has 7 figures (new method) instead of 5 figures (old method) growth. European leaders must finally find a way to produce at least semi-legal GDP figures, whatever the method.