The GDP or the Income of a country is measured as the well known equation Y=C+I+G+(X-M). Y stands for Income; C is consumption; I is investments; G is government spending; (X-M) is trade surplus.
Measured as such, perhaps India is growing at 7.5+%. But I propose that this equation is incomplete. While this equation did a good job of comparing Income of most western developed countries, when applied to countries like India, it misses out a very important aspect of these economies.
I am referring to the national waste that happens in India. This equation does not take into account the leakages, the wastage that happens in India to our stock of food grains, infrastructure both public and private, waste of opportunity cost due to corruption, red tape, etc. Look at how Government spending, especially in infrastructure assets such as roads, pavements, etc. are wasted because of corrupt practices.
This wastage is a key component that keeps our country still in the "developing" stage whereas countries like China are moving into the "developed" category.
If India wants to be the third largest developed economy in the world, then it has to seriously work on reducing wastage so that our growth can be effective.
Thus, Y=C+I+G+(X-M)-W is the new notion of Income.
Measured as such, perhaps India is growing at 7.5+%. But I propose that this equation is incomplete. While this equation did a good job of comparing Income of most western developed countries, when applied to countries like India, it misses out a very important aspect of these economies.
I am referring to the national waste that happens in India. This equation does not take into account the leakages, the wastage that happens in India to our stock of food grains, infrastructure both public and private, waste of opportunity cost due to corruption, red tape, etc. Look at how Government spending, especially in infrastructure assets such as roads, pavements, etc. are wasted because of corrupt practices.
This wastage is a key component that keeps our country still in the "developing" stage whereas countries like China are moving into the "developed" category.
If India wants to be the third largest developed economy in the world, then it has to seriously work on reducing wastage so that our growth can be effective.
Thus, Y=C+I+G+(X-M)-W is the new notion of Income.
