StartupTalky

Tag: India GDP

  • Sabeer Bhatia Challenges Country’s GDP Calculation, Stating, ‘In India, if I give you INR 1,000…’

    According to Hotmail co-founder Sabeer Bhatia, if India wants to compete with China, it needs to reconsider how it gauges economic development and get ready for significant adjustments in workplace culture. Bhatia questioned India’s existing GDP calculation method in a recent podcast. He advocated for a new model that takes productivity and effort into account rather than just financial transactions. Bhatia attacked the way India calculates GDP. He claimed that it overstates economic output by emphasising financial transactions rather than real labour. According to him, India’s GDP is completely incorrect. And it only takes two seconds to look at how GDP is calculated. He added, “If I give you INR 1,000, 18% GST is taxed on it. If you return INR 1,000 to me, 18% of that amount is considered INR 2,000 in GDP. You haven’t worked at all. I haven’t worked. I just handed you some cash. Giving money is not a job. Good work is work.”

    Comparing the Tax Calculation with the USA

    He likened it to the way GDP is determined in nations such as the US, where economic output is correlated with the value of labour and the number of hours worked. Everyone has an hourly rate, he explained. Everyone calculates how many hours a person works, reports that information to the government, and pays a specific amount of taxes, which determines the GDP of the nation. Bhatia says that by implementing a work system that values human effort, India can address this issue. He said that the first step in fixing this in India would be to ensure that everyone is paid on an hourly basis. How many hours do they really spend working on their projects? In order to track work according to effort, he proposed setting fixed hourly wages for all employment categories, including physical labour, law, and medicine.

    How India can Compete with China?

    Bhatia opined that if India wishes to catch up to China’s advancements, it must address its deficiencies in technical skills and work ethic. India needs to change its work ethic, he said. Anyone who is willing to work in China is still valued, and engineers continue to work as engineers after graduation. He condemned the trend in India for engineering graduates to enter management positions rather than engage in construction or creation. After graduating as engineers, 99% of Indians go into management and begin offering gyaan to everyone. Where is the work ethic where they actually go out and construct things and work with their hands? He also drew attention to the value structure in society that prioritises outsourcing over in-house software development. He continued by saying that although he is the software master of India and the business guru of dealing in, you know, body shopping—not software—people in India admire anyone who works with their hands.

  • India’s GDP Growth Prediction for FY25 is Raised by 20 Basis Points to 7% by the IMF

    For fiscal year 2024–25 (FY25), the IMF increased India’s growth prediction by 20 basis points (BPS), bringing it up to 7% from 6.8%. The improvement in private consumption, especially in rural India, is the reason for the improvement in the growth projection, according to the International Monetary Fund’s (IMF) World Economic Outlook (WEO).

    The International Monetary Fund (IMF) revised its GDP growth prediction for India up from 6.5% in April to 6.8%. The UN’s international financial agency maintained its projection for the 2025–26 fiscal year (FY26) of 6.5% growth in the GDP of Asia’s third-largest economy.

    The International Monetary Fund also noted that its earlier projection for global economic growth in 2023 was 3.3% and that its current forecast for this year is 3.2%, both of which are unimpressive. Prior to the pandemic disrupting economic activity in 2019, global growth averaged 3.8% annually.

    Optimism for Global Growth Curbed; Downgraded US Projection

    As a result of slowing US activity and a dropping out in Europe, the world economy is expected to have modest growth in the coming two years. The International Monetary Fund has issued a warning about the slowing down fight against inflation, which could lead to a postponement of interest rate cuts and the maintenance of strong dollar pressure on emerging countries.

    Although it increased its 2025 prediction by 0.1 percentage point to 3.3 percent, the International Monetary Fund maintained its 2024 forecast of 3.2% global real GDP growth unchanged from April. Forecasts fall short of preventing growth from plunging into “the tepid twenties,” as warned by IMF managing director Kristalina Georgieva.

    Inflation is predicted to continue falling globally, from 6.7% in 2023 to 5.9% this year and 4.4% in 2025, after spiking to 8.7% in 2022 due to the fast recovery of the global economy from the pandemic recession. As a result of the first quarter’s disappointing performance, the International Monetary Fund lowered its growth prediction for the United States for this year from 2.7% to 2.6%.

    Service prices stayed high due to wage growth in the labor-intensive sector, and the International Monetary Fund (IMF) cautioned that inflation could rise in the near future due to increased costs of imported goods caused by rekindled trade and geopolitical tensions.

    GDP Projections for India and China

    According to official statistics, India’s GDP expanded by 8.2% in FY24. Both 2022–23 and 2021–22 saw economic growth of 7.2% and 8.7%, respectively. During its most recent monetary policy meeting, the Reserve Bank of India (RBI) increased its GDP prediction for FY25 from 7% to 7.2%.

    This year, the International Monetary Fund raised its growth prediction for China to 5% from 4.6% in April, although it fell short of 5.2% in 2023, in part due to a spike in Chinese exports in early 2024.

    Prior to the release of Monday’s (July 15, 2024) data, the world’s second-largest economy—China—had expanded at a slower-than-expected 4.7% annual rate from April through June, down from 5.3% in the first three months of the year. This was before the IMF prediction was made public.

    India on the Rise: Achieving a $5 Trillion Economy
    To achieve a USD 5 trillion economy, India must tackle challenges like employment, inflation, foreign investment, and macroeconomic stability.
    StartupTalkyKinnary Nensee