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The Print
3 days ago
- Business
- The Print
India's GDP victory over Japan is still a year away. Here's why
Equally clearly, the database presents estimates of India's GDP for fiscal year 2025-26 as $4.187 trillion and Japan's as $4.186 trillion—that is, India's GDP exceeds Japan's by 0.02 per cent in 2025-26. From this, many, if not most, analysts have erroneously concluded that this won't happen until March 2026. Why erroneous? Because it is a fiscal year conclusion, and the 'centre of gravity' of an April-March fiscal year is September. So, it is likely that the NITI Aayog CEO, in making his hasty conclusion, was wrong by only four months. As it happens, Subrahmanyam was hasty by approximately a year. Critics of the government's assertion make two points, one relevant and the other 'noisy'. The relevant point is that the IMF World Economic Outlook (WEO) database clearly shows that for the fiscal year 2024-25 (ending in March 2025), India's GDP was $3.9 trillion while Japan's was $4.0 trillion—that is, Japan was 2.6 per cent ahead. Fortunately, both Japan and India have the same fiscal year—April-March—hence adjustments to WEO data are not needed. There has been much discussion about the assertions made by BVR Subrahmanyam, the CEO of NITI Aayog, India's only official think tank. Speaking at a press conference following the 10th NITI Aayog Governing Council Meeting chaired by Prime Minister Narendra Modi and presumably attended by senior bureaucrats, Subrahmanyam said that 'as I speak', India has overtaken Japan in current dollar GDP. Note that his conclusion and inference pertains to current dollar GDP, and we have to contend with the conversion from rupees to US dollars, and from Japanese yen to US dollars. India and Japan numbers First, let us look at the Indian estimate. Data just released by the Ministry of Statistics and Programme Implementation (MoSPI) on Friday shows that India's GDP in current prices for January-March 2025 quarter was Rs 88.17 trillion, or annualised Rs 352.7 trillion. On 23 May, the last market day before Subrahmanyam's assertion, the exchange rate was Rs 85.4/$—that is, current GDP in March 2025 was 352.7/85.4 or $4.13 trillion. Indian nominal GDP is growing by about 10 per cent a year. So, by March 2026, we should expect current India GDP to reach $4.54 trillion. Now we examine the fortunes of Japan's GDP. The seasonally adjusted quarterly estimate of Japan's GDP is 624.9 trillion yen for Q1 of 2025. On 23 May, the exchange rate was 142.6 yen/$; hence Japan's GDP in March 2025 was $4.38 trillion, some 6.1 per cent ahead of India's GDP on the same date. Given that exchange rates change every day, we need to decide as to what exchange rate we should use. Amongst many, we can use a calendar year estimate, a quarterly estimate or a 23 May estimate. But no matter which one we use, it will be wrong because exchange rates do not remain constant, and the future is not asked to see, que sera sera. All of us are concerned with the 23 May estimate, hence the discussion and this note. Japan's nominal GDP growth has averaged 3.4 per cent for the last three years. Assuming this to be the average for 2025-26, the estimate for March 2026 is $4.53 trillion GDP (as 4.38*1.034). So it will be sometime in March 2027 that India's GDP will exceed Japan's in current dollars. Again, que sera sera, the conclusion will depend on what happens to exchange rates. Changes in exchange rates affect nominal dollar GDP calculations. Assume in March 2027 all estimates come true except the $ yen exchange rate changes from 142.7 to 135 (the yen has become stronger by 5.7 per cent), then Japan's GDP will be 5.7 per cent higher and the day of decision will be delayed beyond March 2027. How do we interpret the dash to conclusion by the CEO? As a sports junkie, I recall countless occasions over the last 50 years when a sprinter looked over his shoulder to see his competitor – and lost the race. Also read: GDP data revisions—why India still struggles with sharp variations Lesson for India—good data, bad data What do we learn from his data-heavy exercise? First, haste makes wrong. Second, and more importantly, what difference will it make to the price of tomatoes (as I am often inclined to say) if India GDP is equal to Japan GDP? Third, and most important, and as pointed out by many, what matters is equivalence in per capita GDP, and on this, we are decades away—whether measured in current $ or PPP $ or constant dollars. One final comment. It is unfortunate that in the last ten years, most of the decision-making bureaucracy has lost respect for the data. The bad quality household consumer expenditure data for 2017-18 has still not been released. Several analyses of the 2017-18 data (see the 2022 IMF Working Paper authored by me and my colleagues Karan Bhasin and Arvind Virmani, and several other documents and books) conclude that the 2017-18 data was of such bad quality that the world, and India, needed to examine why it was of such bad quality. By not releasing that data, we have created an atmosphere where it is 'open sesame' for domestic and international scholars to question good Indian data. Food for thought for Niti and decision-making bureaucrats. Surjit S Bhalla is a former Executive Director at the International Monetary Fund. He tweets @surjitbhalla. Views are personal. (Edited by Aamaan Alam Khan)
India Gazette
5 days ago
- Business
- India Gazette
"Modi govt spreads lies about the economy to hide massive failures," says Mallikarjun Kharge after India becomes the 4th largest economy
New Delhi [India], May 29 (ANI): Congress President Mallikarjun Kharge on Thursday accused the BJP-led central government of consistently spreading misinformation about the economy to cover up its 'massive failures.' He claimed that over the past eleven years, the government has systematically weakened every sector of the Indian economy. In a post on X, Kharge wrote, 'The Modi government has made it a habit to spread lies about the economy to hide its gross failures! For 11 consecutive years, this incompetent government has been destroying every sector of the economy. The truth is here.' Earlier on Monday, Kharge had launched a scathing attack on Prime Minister Narendra Modi as the government completed 11 years in office. The Congress president alleged that the Modi-led administration had 'ruined' the country and that its promise of 'achhe din' (good days) had turned into a 'dreadful dream.' He stated that a promise of doubling farmers' income was not fulfilled, so they had to eat rubber bullets, whereas women's security is currently in 'tatters.'Mallikarjun Kharge further alleged atrocities against the minorities of the country and believed that their participation in society is lost. Meanwhile, on May 23, addressing a press conference of the 10th NITI Aayog Governing Council Meeting on 'Viksit Rajya for Viksit Bharat 2047', NITI Aayog CEO, Subrahmanyam, said that India has overtaken Japan to become the world's fourth-largest economy. Citing data from the International Monetary Fund, the CEO of India's apex think tank stated that India's economy has reached the USD 4 trillion mark.' 'We are the fourth-largest economy as I speak, a USD 4 trillion economy. This is not my data; this is the data from the IMF. India today is larger than Japan. It's only the United States, China, and Germany that are larger. If we stick to what is being planned, what is being thought through, it's a matter of another two to three years; we would become the third largest economy,' said Subrahmanyam. On Tuesday, Prime Minister Narendra Modi said that pressure has increased to go one notch higher in the ladder of top global economies, surpassing the excitement and happiness of India becoming the fourth-largest economy. The Prime Minister highlighted that the goal is clear: By the year 2047, India must be a 'Viksit nation' with no compromise. Addressing a public rally in Gandhinagar, the Prime Minister recalled the excitement among the country's youth when India surpassed the United Kingdom, which had ruled India for over 200 years, and became the fifth largest economy. (ANI)
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Business Standard
5 days ago
- Business
- Business Standard
Modi govt spreads lies about economy to hide massive failures, says Kharge
He stated that a promise of doubling farmers' income was not fulfilled, so they had to eat rubber bullets, whereas women's security is currently in tatters ANI Congress President Mallikarjun Kharge on Thursday accused the BJP-led central government of consistently spreading misinformation about the economy to cover up its "massive failures." He claimed that over the past eleven years, the government has systematically weakened every sector of the Indian economy. In a post on X, Kharge wrote, "The Modi government has made it a habit to spread lies about the economy to hide its gross failures! For 11 consecutive years, this incompetent government has been destroying every sector of the economy. The truth is here." Earlier on Monday, Kharge had launched a scathing attack on Prime Minister Narendra Modi as the government completed 11 years in office. The Congress president alleged that the Modi-led administration had "ruined" the country and that its promise of "achhe din" (good days) had turned into a "dreadful dream." He stated that a promise of doubling farmers' income was not fulfilled, so they had to eat rubber bullets, whereas women's security is currently in "tatters."Mallikarjun Kharge further alleged atrocities against the minorities of the country and believed that their participation in society is lost. Meanwhile, on May 23, addressing a press conference of the 10th NITI Aayog Governing Council Meeting on 'Viksit Rajya for Viksit Bharat 2047', NITI Aayog CEO, Subrahmanyam, said that India has overtaken Japan to become the world's fourth-largest economy. Citing data from the International Monetary Fund, the CEO of India's apex think tank stated that India's economy has reached the USD 4 trillion mark." "We are the fourth-largest economy as I speak, a USD 4 trillion economy. This is not my data; this is the data from the IMF. India today is larger than Japan. It's only the United States, China, and Germany that are larger. If we stick to what is being planned, what is being thought through, it's a matter of another two to three years; we would become the third largest economy," said Subrahmanyam. On Tuesday, Prime Minister Narendra Modi said that pressure has increased to go one notch higher in the ladder of top global economies, surpassing the excitement and happiness of India becoming the fourth-largest economy. The Prime Minister highlighted that the goal is clear: By the year 2047, India must be a "Viksit nation" with no compromise. Addressing a public rally in Gandhinagar, the Prime Minister recalled the excitement among the country's youth when India surpassed the United Kingdom, which had ruled India for over 200 years, and became the fifth largest economy.
India Gazette
6 days ago
- Business
- India Gazette
"On what basis are you claiming...": Sanjay Raut questions India becoming 4th largest economy
Mumbai (Maharashtra) [India], May 28 (ANI): Shiv Sena (UBT) MP Sanjay Raut on Wednesday questioned India's rise to becoming the world's fourth-largest economy, challenging the basis for celebration amid record-high unemployment and declining foreign investment. Speaking to the media, Raut pointedly remarked that in a nation where 85 crore people still rely on free food grains, such boasts ring hollow. 'In a country where even today, Prime Minister Modi has to provide free food grains to 85 crore poor people, where unemployment is at its highest, and foreign investment has stopped coming in, on what basis are you claiming that we have become the world's fourth-largest economy?' Sanjay Raut said. On Friday evening, addressing a press conference of the 10th NITI Aayog Governing Council Meeting on 'Viksit Rajya for Viksit Bharat 2047', NITI Aayog CEO, Subrahmanyam said that India has overtaken Japan to become the world's fourth-largest economy. Citing data from the International Monetary Fund, the CEO of India's apex think tank stated that India's economy has reached the USD 4 trillion mark. 'We are the fourth-largest economy as I speak. We are a USD 4 trillion economy. This is not my data; this is the data from the IMF. India today is larger than Japan. It's only the United States, China, and Germany which are larger, and if we stick to what is being planned, what is being thought through, it's a matter of another two to three years; we would become the third largest economy,' said Subrahmanyam. Earlier on Tuesday, Prime Minister Narendra Modi said that the pressure has increased to go one notch higher in the ladder of top global economies, and it surpasses the excitement and happiness of India becoming the fourth largest economy. The Prime Minister highlighted that the goal is clear that by the year 2047, India must be a 'Viksit nation' with no compromise. Addressing a public rally in Gandhinagar, the Prime Minister recalled the excitement among youth of the country when India surpassed United Kingdom, who had ruled India for over 200 years, and became the fifth largest economy. (ANI)
Time of India
6 days ago
- Business
- Time of India
"On what basis are you claiming...": Sanjay Raut questions India becoming 4th largest economy
Sanjay Raut questioned India's claim of becoming the fourth-largest economy, citing high unemployment and declining foreign investment. He argued that celebrating this achievement is difficult when a significant portion of the population relies on free food grains. NITI Aayog CEO Subrahmanyam, referencing IMF data, stated India has surpassed Japan, reaching a USD 4 trillion economy. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Shiv Sena (UBT) MP Sanjay Raut on Wednesday questioned India's rise to becoming the world's fourth-largest economy, challenging the basis for celebration amid record-high unemployment and declining foreign to the media, Raut pointedly remarked that in a nation where 85 crore people still rely on free food grains, such boasts ring hollow."In a country where even today, Prime Minister Modi has to provide free food grains to 85 crore poor people, where unemployment is at its highest, and foreign investment has stopped coming in, on what basis are you claiming that we have become the world's fourth-largest economy?" Sanjay Raut Friday evening, addressing a press conference of the 10th NITI Aayog Governing Council Meeting on 'Viksit Rajya for Viksit Bharat 2047 ', NITI Aayog CEO, Subrahmanyam said that India has overtaken Japan to become the world's fourth-largest data from the International Monetary Fund , the CEO of India's apex think tank stated that India's economy has reached the USD 4 trillion mark."We are the fourth-largest economy as I speak. We are a USD 4 trillion economy. This is not my data; this is the data from the IMF. India today is larger than Japan. It's only the United States, China, and Germany which are larger, and if we stick to what is being planned, what is being thought through, it's a matter of another two to three years; we would become the third largest economy," said on Tuesday, Prime Minister Narendra Modi said that the pressure has increased to go one notch higher in the ladder of top global economies, and it surpasses the excitement and happiness of India becoming the fourth largest Prime Minister highlighted that the goal is clear that by the year 2047, India must be a "Viksit nation" with no a public rally in Gandhinagar, the Prime Minister recalled the excitement among youth of the country when India surpassed United Kingdom, who had ruled India for over 200 years, and became the fifth largest economy.
