GDP measure has limitations

GDP measure has limitations


Sanjeev Sanyal's article 'Go Beyond Statistics' is pertinent and timely (TOI-Feb 10 ). In his brilliant analysis, he advocates going beyond the realm of GDP as it has severe limitations. It is accepted by the governments the world over, that GDP is the most commonly used paradigm for measuring the state of economy and human progress. The creators of GDP were well aware that the three pillars on which analysis of society ought to rest are studies of economic, socio-demographic and environmental phenomena. Their thrust and framework was essentially 'industrial' in essence without space for niceties like environmental degradation and socio-demographic concerns. Total reliance on GDP as practised now leads us to a wrong analysis and status of society.The alternative is to recalibrate GDP by inclusion of value generation by assigning values to areas like water pollution, deforestation, land degradation, human capital stock like health and education. Such a recalibrated GDP is more reliable to reflect the status of the overall economy and quality of life of the citizens. Addtional matrices for measuring progress must find place in the calibration of a revised GDP formula as the present formula has limitations.


A.R.K.Pillai
Feb-11-09