What GDP does and doesn't tell us about India

Every quarter, a single number briefly organises Indian public debate: GDP growth. Politicians claim it, opponents dispute it, markets trade it. Almost nobody reads the press note it comes from. This explainer is for the reading.

What the number actually measures

GDP is the market value of everything produced within India’s borders in a period. Three words in that sentence carry all the weight. “Market” means unpaid work — most of it done by women — is invisible. “Produced” means asset price gains don’t count. “Borders” means an Indian firm’s Dubai profits don’t either.

Where the blind spots are

India’s statistical system measures its formal sector well and its informal sector by proxy. Roughly half of the workforce sits in the part measured by assumption. When the formal and informal economies diverge — as they did after demonetisation and the pandemic — GDP tracks the half that is easier to see.

GDP is a speedometer, not a dashboard. It tells you how fast, never how well, and only for the vehicle it can see.

None of this makes the number useless. It makes it a number — one input among several, best read alongside employment surveys, consumption data and the humble two-wheeler registration series. The mistake is not trusting GDP too little. It is asking it questions it was never designed to answer.