Unravelling GDP growth I: More growth is producing more inequality and misery

Unravelling GDP growth I: More growth is producing more inequality and misery

This is first of a two-part series that highlights how growth is not working for the majority and wealth and income are increasingly concentrating at the very top 1% and 0.1%, at the cost of the rest

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GDP and its growth rate are mapped and released at regular intervals, providing quarterly and annual estimatesGDP and its growth rate are mapped and released at regular intervals, providing quarterly and annual estimates
Prasanna Mohanty
  • Jun 29, 2020,
  • Updated Jul 2, 2020 8:24 PM IST

On April 16, the World Bank updated its cover note on 'Understanding Poverty' saying: "According to the most recent estimates, in 2015, 10 per cent of the world's population or 734 million people lived on less than $1.90 a day. That's down from nearly 36 per cent or 1.9 billion people in 1990. However, due to the COVID-19 crisis as well as the oil price drop, this trend probably will reverse in 2020. The COVID-19 crisis will have a disproportionate impact on the poor, through job loss, loss of remittances, rising prices, and disruptions in services such as education and health care."

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The note ends with the following:

"Moreover, for those who have been able to move out of poverty, progress is often temporary: Economic shocks, food insecurity and climate change threaten to rob them of their hard-won gains and force them back into poverty. It will be critical to find ways to tackle these issues as we make progress toward 2030."

In many ways, these sentences carry many of the conundrums of economic growth, including the very fragile nature of it for the poor.

Also Read:

The standard practice of measuring growth is gross domestic product (GDP) - as was used in the first graph. How do we know?

Here is an illustration. The last time India released its growth numbers, a Business Today headline on May 29, 2020, said: 'India's Q4 GDP growth falls to 3.1% - worst since 2009 global financial crisis'.

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'Q4' here stands for the fourth (and last) quarter of FY20 - that is the three months of January, February and March 2020 (India's nationwide lockdown began on March 25). India counts its fiscal year from April 1 to March 31.

GDP and its growth rate are mapped and released at regular intervals, providing quarterly and annual estimates. The relevant data is released by the National Statistical Office (NSO) of the Ministry of Statistics and Programme Implementation (MoSPI).

How GDP came to be a measure of economic growth worldwide, why it measures what it does is a fascinating tale and that is critical to understanding some of the conundrums that growth presents. But that is in the next part.

On April 16, the World Bank updated its cover note on 'Understanding Poverty' saying: "According to the most recent estimates, in 2015, 10 per cent of the world's population or 734 million people lived on less than $1.90 a day. That's down from nearly 36 per cent or 1.9 billion people in 1990. However, due to the COVID-19 crisis as well as the oil price drop, this trend probably will reverse in 2020. The COVID-19 crisis will have a disproportionate impact on the poor, through job loss, loss of remittances, rising prices, and disruptions in services such as education and health care."

Advertisement

The note ends with the following:

"Moreover, for those who have been able to move out of poverty, progress is often temporary: Economic shocks, food insecurity and climate change threaten to rob them of their hard-won gains and force them back into poverty. It will be critical to find ways to tackle these issues as we make progress toward 2030."

In many ways, these sentences carry many of the conundrums of economic growth, including the very fragile nature of it for the poor.

Also Read:

The standard practice of measuring growth is gross domestic product (GDP) - as was used in the first graph. How do we know?

Here is an illustration. The last time India released its growth numbers, a Business Today headline on May 29, 2020, said: 'India's Q4 GDP growth falls to 3.1% - worst since 2009 global financial crisis'.

Advertisement

'Q4' here stands for the fourth (and last) quarter of FY20 - that is the three months of January, February and March 2020 (India's nationwide lockdown began on March 25). India counts its fiscal year from April 1 to March 31.

GDP and its growth rate are mapped and released at regular intervals, providing quarterly and annual estimates. The relevant data is released by the National Statistical Office (NSO) of the Ministry of Statistics and Programme Implementation (MoSPI).

How GDP came to be a measure of economic growth worldwide, why it measures what it does is a fascinating tale and that is critical to understanding some of the conundrums that growth presents. But that is in the next part.

Read more!
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