Letter to BS: Growth in GDP does not always ensure better living conditions

This refers to the editorial “Looking beyond GDP” (August 25). The modern concept of GDP was invented by Simon Kuznets during the inter-war period to measure the resources available to the USA to assess its preparedness for future war. Since then it somehow became conventional to measure a country’s progress on the basis of the rate of increase in this metric.

Unfortunately, it was observed across the world and particularly in developing countries that growth in GDP did not always ensure better living conditions for the masses. It said nothing about the progress on the fronts of poverty and inequality. Paradoxically, it was recorded that along with increase in GDP, poverty and inequality too increased. So the search for alternative and better measure began that could measure human well-being.

Some economists have attempted to devise indices like Gross National Happiness, Human Happiness Index, Green National Product etc to account for important aspects like environmental sustainability and impact of economic policies on human happiness. It is high time India too stops giving undue importance to GDP and instead focus on improving its ranking on indices reflecting human development. 

Ketan K Shah 

Ahmedabad