Enhanced GDP and declined prices- A real development indicative?

116 Comments
71,654 views

‘GDP’ and ‘Inflation’ are the two words that have crossed the borders of books of economics and economists’ dialogues. Today, the common man cheers at the elevating GDP and is upset to hear the upward trend in the rate of inflation. News channels debate over these concerns and the political leaders use them as a weapon during polls. But, tell me, would every hike in your fuel charges be disadvantageous? What about when you switch over your job and are paid 30 percent more, while the commuting expense to new office hikes by 8 percent? Indeed, not every upsurge in commodity prices is detrimental, nor is every downfall a sign of economic recovery.

To start with, let me make you aware of not a quite renowned concept of GPI (Genuine Progress Indicator). Introduced with a view to replacing GDP (Gross Domestic Product), this metric takes into account social and environmental factors, which do not find any place in the calculation of GDP. For instance, when the crime rate in an economy hikes, GDP boosts owing to the hike in legal fee, medical bills, and such other expenses. On the contrary, GPI views the upsurge in crime rate as a negative symbol. Similar is the case when GDP views high industrial growth as positive, overlooking the pollution aspect; however GPI takes into account the negative too.

Another key aspect is the linkage of boom in the stock market with economic prosperity. What would you say about the scenario when unnecessary speculative funds are chasing just a few lots or when trading is backed by margin trades? Same is the case when economists or some political leaders claim high public debt as unfavorable for the economy. To create valuable and socially significant assets that can pay off in the long run, the government largely depends on public debt. Unless the borrowed amount is outlaid on just non-productive streams such as pensions and salaries, not every rise in the public debt can be regarded as detrimental.

Now, let us also view some underlying facts prior to regarding every hike in the GDP as an economic boom. Would the rise in GDP backed by false demand serve any purpose than to result in sub-optimal resource utilization and uneconomical value consumption? Remember, until the hike in GDP is an outcome of resourceful exploitation of resources and natural increase in demand, the real purpose is never met. As far as analyzing the rising prices is concerned not every inflation can be termed as bad, unless caused by surplus money supply at the demand side or by cost momentum at the supply side. Better wages and work are the pluses of inflation.

In the same context, we can study the real impacts of upswing in employment rates and capital accumulation. Employment, as far as, just enhancing the marketing and economic overheads, can prove unfavorable in the long run. Capital accumulation, if not accompanied with prudent investment, can rarely serve any purpose. While the new government at the center is focusing much on bringing the key economic factors on the correct track, underlying facts and driving forces must not remain overlooked. India aspires for stable economic viability, and under no circumstances doors can be opened for bubbles that blast with time leaving nil assets.

116 thoughts on “Enhanced GDP and declined prices- A real development indicative?”

  13. Yogender

    Hi there everyone, it’s my first go to see at this site,
    and piece of writing is genuinely fruitful in favor of me,
    keep up posting these types of content.

    Reply ↓
  14. Suresh

    If some one wishes to be updated with most recent technologies therefore he must be pay a quick visit this site and be up to date all the time.

    Reply ↓
  19. Nino

    Just want to say your article is as astonishing. The clearness in your post is just cool and i can assume you are an expert on this subject. Well with your permission let me to grab your feed to keep updated with forthcoming post. Thanks a million and please carry on the enjoyable work.

    Reply ↓
  25. K.K. Mahajan

    I’m often to blogging and i really appreciate your content.
    The article has actually peaks my interest.
    I am going to bookmark your web site and keep checking for brand new information.

    Reply ↓
  30. J.S. Rana

    Absolutely wonderful, well done everyone, what a great achievement.
    Here’s to the future and success for everyone. Thank you all for your hard work, we know it will be
    ongoing and trust that you will get the appreciation and credit of putting such brilliant articles on the worldwide web.
    Looking forward to seeing it grow.

    Reply ↓
  33. S.K. Sachdeva

    I’m very happy to find this web site.
    I wanted to thank you for your time due to this fantastic read!!
    I definitely liked every little bit of it and i also have you saved to
    fav to see new information in your site.

    Reply ↓
  39. Rajeev Shukla

    Excellent goods from you, man. I have understand your stuff prior to and you
    are just extremely great. I really like what you have
    obtained here, certainly like what you’re stating and the best way
    by which you are saying it. You make it entertaining and you continue to care for to stay it sensible.
    I cant wait to learn much more from you. This is really a great site.

    Reply ↓
  44. Sharad

    Spot on with this write-up, I absolutely believe that this amazing site needs much more attention.
    I’ll probably be returning to read through more, thanks for the advice!

    Reply ↓
  55. V. Malhotra

    I’m often to blogging and i really appreciate your content.
    The article has actually peaks my interest.
    I am going to bookmark your web site and keep checking for brand new information.

    Reply ↓
  57. S. Agnihotri

    Absolutely wonderful, well done everyone, what a great achievement.
    Here’s to the future and success for everyone.
    Thank you all for your hard work, we know it will be ongoing and
    trust that you will get the appreciation and credit of putting such brilliant articles on the worldwide web.
    Looking forward to seeing it grow.

    Reply ↓
  73. Anil

    If some one wishes to be updated with most recent technologies therefore he
    must be pay a quick visit this site and be up to date all the time.

    Reply ↓
  81. Harsimran I

    just want to say I am just all new to blogging and site-building and absolutely enjoyed this web site.
    Likely I want to bookmark your site .
    You actually come with amazing writings.
    Bless you for sharing your web page.

    Reply ↓
  84. Manoj

    Great task on this publish! I enjoy the way you displayed your info as well as the
    way a person achieved it significant and also obvious to be aware of. Thanks a great deal.

    Reply ↓
  99. Rohit

    Thank you for some other magnificent post.
    Where else could anybody get that kind of information in such a perfect manner of writing?
    I have a presentation subsequent week,
    and I’m on the look for such information.

    Reply ↓
  102. Sharad

    After looking into a handful of the blog articles on your website,
    I seriously like your technique of writing a blog.
    I added it to my bookmark site list and will be checking back in the near future.

    Reply ↓
  105. Kaushal

    Ahaa, its pleasant dialogue about this piece of writing at this place at this weblog,
    I have read all that, so at this time me also commenting here.

    Reply ↓
  106. Kamal

    I started to read your article and it caught me to the extent that I couldn’
    t put it down.
    Amazing piece.
    I started to read your article and it caught me to the extent that I couldn’t put it down.
    Amazing piece.

    Reply ↓
  111. Jagdish

    I don’t even know how I ended up here, however I assumed this publish was great.
    I do not recognize who you are however certainly you are going
    to a well-known blogger in the event you are not already. Cheers!

    Reply ↓

Leave a Reply

Your email address will not be published. Required fields are marked *