India’s Present Growth Model on The Basis of GDP is Imperfect

 

By Dr. Gyan Pathak

UN Geneva’s Beyond Lab’s movement around ‘Beyond GDP’ has many lessons for India, the country whose ruling establishment has recently created a hype around its GDP growth. Quoting the IMF data, the government said India’s economy has reached $4.3 trillion in 2025, which was $2.1 trillion in 2015, has become fifth largest economy under PM Narendra Modi’s 10 years of rule, will surpass Japan’s GDP in few months, and could overtake Germany by 2027. What the GDP figures do not show is that India has largest number of poor in the world, and 7th largest country in wealth inequality. It is the stark example of GDP measuring development very poorly or not at all, in fact, and therefore, the country has many lessons to learn from the Beyond GDP movement.

It is only last week, the United Nation’s Geneva’s Beyond Lab has launched a “Beyond Action Platform”, which is a bold new space, to drive home the point that countries should consider looking beyond Gross Domestic product (GDP), as the key measure of economic growth to achieve the ambitious Sustainable Development Goals (SDGs).

UN policymakers have been suggesting this for a long time, and the current initiative of the movement around “Beyond GDP” is in line with the UN Secretary General Antonio Guterres’s longstanding assertion that “moving beyond GDP is fundamental to building an economy system that gives value to what counts – human well-being –now and in the future, and for everyone.”

While GDP has become the gold standard by which economic development is judged, it was never intended to encompass the overall wellbeing and progress of any single nation. Neither does it capture the value of human, social or nature capital, explained Özge Aydogan, Director of UN Geneva’s Beyond Lab.

“That’s something that GDP measures very poorly – or not at all, in fact,” Ms. Aydogan said, “so, the whole movement around ‘Beyond GDP’ is to look into ways of moving from an extractive economy – which we are on right now – into an economy where capital … is not only created for economic purposes that only benefit a few, but actually for people and planet.”

Ms Aydogan’s statement can be seen in India where only a handful of companies and individuals are bagging major share in wealth and income of the country. Only 20 companies have 60 per cent of the wealth of India, while their share in the income of the entire nation is 70 per cent. On the other hand, over 80 crore out of the total 142 crore of India’s population depend on free food grains under Pradhan Mantri Garib Kalyan Anna Yojna just to satisfy their hunger, and according to World Bank 97 crore people are not getting enough nutritious food for healthy survival.

The Beyond GDP movement is therefore most relevant for India. Beyond Lab has been brainstorming with government officials, researchers and though leaders in sustainability. The movement has been emphasising on integration of untapped human capital, natural resources and well-being into how a country’s wealth might be calculated in future.

However, what policymakers still haven’t worked out is what a post-GDP economy would look like – neither have they agreed on the best path to get there.

Ms. Aydogan says that an ideal scenario for 2025 would be a regenerative economy – one that isn’t only extracting resources to derive revenue, but rather, creating wealth through untapped virtual assets. In practical terms, countries would factor in other wealth-creating assets, such as a country’s natural resources. “You replenish nature, for instance,” she explained, adding that more holistic metrics would not necessarily replace GDP. “What we’re really actually looking into is to complement GDP.”

Whether politicians will venture away from campaigns focused on how much they have grown GDP and adopt other measurements, remains to be seen, said Ms. Aydogan.“We have been taught a certain way to look at the economy,” she said. “But at the same time, the fact that we’re hitting all these planetary boundaries…shows us that the status quo is just simply not viable anymore.”

There have been alternative economic metrics for quite sometime now. One of the major alternatives was proposed in 1972 by King Jigme Singye Wangchuck of Bhutan, which is called the Gross National Happiness Index. Under this GNHI, four areas of development are captured – sustainable development, conservation of environment, preservation and promotion of culture, and good governance.

Then, there is the Human Development Index which evaluate the overall development and well-being of a nation, which takes into account life expectancy, standard of living, and education.

As the world continues researching more, it is being revealed that the GDP model in insufficient. Nathalie Bernasconi of the International Institute for Sustainable Development (IISD) says that change-makers must find ways to translate the scientific evidence into national policies. They should also create incentives for governments to move away from an outdated, GDP-heavy paradigm that was created in the 1930s, in the aftermath of the Great Depression, by the economist Simon Kuznets to measure economic output and help policymakers respond to the crisis. “GDP alone cannot guide us towards this future, she emphasised.

Bingying Lou of the Beyond Lab says that GDP is not necessarily a reliable indicator of sustainability. While giving examples of man-made disasters caused by economic activities, Bingying says that it also does not capture the long-term losses caused by disasters, that cause pervasive harm to the ecosystem and local communities.

The speakers in the UN Beyond Lab event held on March 26, noted that today’s financial and economic systems are not equipped to capture the true wellbeing of our societies and for a sustainable future for all. The Pact for the Future, adopted at the recent UN Summit of the Future, highlighted the need to redefine prosperity beyond traditional economic indicators like Gross Domestic Product (GDP), and redesign our economic systems around social and environmental values, and towards a regenerative economy.

To take the discussion one step further, policymakers will convene at the International Conference on Financing for Development in Seville, Spain from June 30 to July 3, 2025, and at the World Social Summit in Doha, Qatar in November 2025. (IPA Service)

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