Ra­jan calls for relook at GDP method­ol­ogy

Hindustan Times ST (Mumbai) - HT Navi Mumbai Live - - FRONT PAGE - HT Correspondent ht­metro@hin­dus­tan­times.com

Re­serve Bank of In­dia (RBI) gov­er­nor Raghu­ram Ra­jan on Thurs­day re­vived the de­bate on the method of cal­cu­lat­ing gross do­mes­tic prod­uct (GDP), say­ing there are prob­lems as it only talks about growth and leaves out a wider con­text.

“On the point about GDP, there are also prob­lems with the way we count GDP… Some­times we get growth when peo­ple move to a dif­fer­ent area but we have to en­sure that when peo­ple move, they do some­thing that is value adding [to the econ­omy]... We do lose some, we gain some and what is the net, let us be care­ful about how we count that,” Ra­jan said, while ad­dress­ing stu­dents at the 13th con­vo­ca­tion cer­e­mony of the Indira Gandhi In­sti­tute of De­vel­op­ment Re­search.

Ra­jan il­lus­trated his point by say­ing that if two moth­ers were to take care of each other’s chil­dren and pay each other for that work, there would be some growth in GDP due to the sum of their earn­ings. How­ever, this growth would not add any­thing to the econ­omy.


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