Why Pakistan Low GDP and India's high GDP do not reflect true picture of the economy | World Defense

Why Pakistan Low GDP and India's high GDP do not reflect true picture of the economy


Sep 4, 2019
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I want to discuss and understand the dynamics behind GDP calculations. Indians are very proud of the fact that they have a $2.7T economy and yet Pakistan's economy is listed as merely $300 billion.

So are these numbers true reflections of each country's economy?

Here are my questions:

GDP is calculated as : The following equation is used to calculate the GDP: GDP = C + I + G + (X – M) or GDP = private consumption + gross investment + government investment + government spending + (exports – imports).

Every time the rupee falls our economy shrinks. Does that mean our infrastructure, industrial output, agriculture production, food security, and national assets also shrink?
It doesn't make sense to base the GDP number based solely on the dollar value attached to the country.
How about taking into account the income distribution, standard of living, satisfaction and happiness index, and income disparity into account as well.

For example, we all know that 138 billionaires' income in India is equal to their entire workforce. In other words, 138 companies produce the GDP of the entire remaining workforce and rural farmers combined. It gets worse....If you add India's top 200 companies then their share of GDP goes up to almost 70%.

In other words, the corporate sector makes and circulates their money which does not reflect the income of over 500 million daily laborers or farmers. So about 100 million people working for these big companies make big money and their spending power is reflected as the income of very poor making them all look even and well off.

Pakistan with the lack of super-rich and super large corporations does not suffer from the same inequality and skewed income distribution. An average citizen of Pakistan may still be better reflected with respect to their annual GDP income than let's say in India or even in Bangladesh where similar large garment factory owners earn huge amounts but yet their profits are reflected as an income of a worker on the floor. For example, India manufactures cars and exports them for different companies. many parts are brought in and cars assembled and the finished product is sent out of the country. Other than wages and parts built which may be the 50 % of the total cost where did the other 50 % profit go? who is benefiting from it? Toyota or Honda in Japan? but yet the export of the car shows up in GDP for the full price and India's GDP keeps going up.

World Hunger index consistently ranks India below us in their hunger index. Shouldn't the number of hungry and unhappy and unprivileged be reflected in the GDP figure?

Many people who visit India are still struck with the unbelievable poverty there. The same people visiting Pakistan are pleasantly surprised with the better infrastructure and relatively better living conditions. I have many friends who are Indians and married Pakistani and without an exception when I ask where they felt better and saw better living standards their answer is Pakistan.

Nawaz may have stolen money and borrowed but during his time we managed to create an infrastructure that we can be happy about. CPEC again has done tremendous work to open up parts of the country that no one could access before. Connectivity and improved infrastructure (such as dams and power plants) will bring a lot of economic activity and managing the debt is critical to the long term benefits of such plans.

Pakistan Gross debt to income ratio is still not at a critical level and better than countries like Italy, Greece, and other developed countries. Our real problem is lack of management of resources rather than lack thereof. Someone, please explain to me why the government is running the steel mill, power plants, and an airline and giving out 100 billion Rs in subsidy every year?