Friday, January 22, 2021
Home Economy and Finance What they never told you when they said India was the worst performing emerging...

What they never told you when they said India was the worst performing emerging economy

So who is doing better than India? Apparently, almost everyone. I suppose this is a good time for all and sundry, from the high brow Kaushik Basu to social media based economist Dhruv Rathee to take potshots at Modi’s India.

How would you like to see India’s GDP grow at double digit rates? Sure, you would love that. Suppose then that India’s (real) GDP growth soars to 10%. Add to that say 4% inflation, leading to nominal GDP growth of 14%. Fantastic! I wish…

Just one catch. In return for this 14% nominal GDP growth, you must agree to the Indian Rupee crashing by 50% against the US Dollar.

How do you like the bargain now?

Of course, such a situation would never present itself in the real world. If India’s economy was chugging along at 10%, the whole world would be at India’s door. The Indian Rupee would rise in value, not fall. On the flip side, if India’s economy was doing horribly, the world would rush for the exit. The Indian Rupee would lose value.

You must have seen the headlines. As the Mint put in “plain facts,” India’s GDP, with a shocking contraction of -23.9% is pretty much at the bottom of the table of emerging economies.

Mint article on Indian economy

So who is doing better than India? Apparently, almost everyone. I suppose this is a good time for all and sundry, from the high brow Kaushik Basu to social media based economist Dhruv Rathee to take potshots at Modi’s India.

Now, here is what is missing from those “plain facts.” Did they mention what happened to the respective emerging market currencies during this same time? Every country reports GDP growth only in its national currency and not in USD.

India’s economy contracted by 23.9%. For comparison, Brazil’s GDP contracted by 11.9% and Russia’s GDP by 8%. So, did they really do better than India?

Absolutely not. Brazil’s GDP contracted by 11.9% in terms of the Brazilian Real (BRL). Russia’s GDP contracted by 8% in terms of the Russian Ruble (RUB). India’s GDP contracted by 23.9% in Indian Rupee terms.

Unless we move to the same unit, we are almost literally comparing apples to oranges to mangoes.

So what happens when we look at the respective contractions in USD terms? Here is the disaster that struck the RUB and the BRL in times of the Wuhan Coronavirus.

USD vs Russian Ruble

From 1 USD = 61.73 RUB at the beginning of the year, the RUB has collapsed to 76.09 to the dollar. That is down by over 23%!

And look at the Brazilian Real (BRL)

USD vs Brazilian Real

From 1 USD = 4.02 BRL at the beginning of the year, the BRL has collapsed to 5.34 to the dollar. That is down by nearly 33%!

And now see the Indian Rupee, almost rock solid.

USD vs INR

Down by barely 4% since the beginning of the year. As it always happens, the US Dollar gains in value during times of global distress. Even though we are facing a once in a century global crisis, the Rupee has barely lost any value.

Does it not make more sense to compare everything in same units? So Brazil lost 11.8% of its apples and India lost 23.9% of its oranges. But the price of apples fell by 33% during the same period, while the price of oranges declined only by 4%. So who really lost more?

Oh great economic minds, do tell us.

  Support Us  

Whether NDTV or 'The Wire', they never have to worry about funds. In name of saving democracy, they get money from various sources. We need your support to fight them. Please contribute whatever you can afford

Abhishek Banerjeehttps://dynastycrooks.wordpress.com/
Abhishek Banerjee is a math lover who may or may not be an Associate Professor at IISc Bangalore. He is the author of Operation Johar - A Love Story, a novel on the pain of left wing terror in Jharkhand, available on Amazon here.  

 

Related Articles

Trending now

AIMIM’s West Bengal ally Islamic cleric Peerzada Abbas Siddiqui launches ‘secular’ party to contest West Bengal Assembly polls

Peerzada Abbas Siddiqui said that he met AIMIM Chief Asaduddin Owaisi who assured him full support in West Bengal

Protesting farmer unions reject union government’s proposal to suspend implementation of farm laws for 1-1.5 years

The decision was taken in a meeting of the protesting farmer unions today, saying that they only want the repeal of the laws.

Indian Express spreads fake news claiming there were internal objections to Adani Group winning all 6 airports: Read the facts

The civil aviation ministry said that same allegations made in the Indian Express report were already dismissed by Kerala High Court

5 persons dead at Serum Institute of India fire incident, efforts on to control damage

Reports have stated that the fire incident happened at an under construction building and vaccine facilities are safe.

Two suicide bombers detonate themselves in busy Baghdad market killing six, injuring dozens

As per reports, this was one of the rare suicide attacks in Central Baghdad.

Bernie Sanders and his mittens during Biden inauguration trigger a meme fest on social media. Details

The US Senator from Vermont was spotted at the venue wearing parka and a pair of very homely looking mittens at the high profile event.

Recently Popular

Arnab vs Navika: Arnab responds to Navika’s emotional monologue, says he carried his shoes with him

Recently, Navika Kumar said that when Arnab left Time Now, she had his shoes to fill. However, Arnab gives a befitting reply.

The hidden chats in the TRP Chargesheet that nobody is talking about, not even the police: India Today and BARC

In the TRP case chargesheet, pages of personal chats between Arnab Goswami and the ex-BARC CEO Partho Dasgupta have been added

‘Jack Ma is safe and sound’, is ‘laying low’ claims founder and chairman of equity firm Primavera Capital Group

Days after his unflattering opinion of the Chinese authorities, Alibaba founder Jack Ma went mysteriously missing

“Not forgetting this communication until death”: Chef turned filmmaker Vikas Khanna reveals how he was asked to pay for favourable reviews of his movie

Vikas Khanna stated that critics had asked him to pay 3 lacs for 3 star-rating and 4 lacks for 4 star-rating of his movie 'The Last Colour'

Pakistan ‘successfully’ test-fires missile injuring people, destroying houses in civil area, say Baloch leaders

Contrary to claims of Pakistani Army's successful tests of Shaheen-III Missile, several reports coming from Pakistan suggests that the test carried out by Pakistan was a massive failure as the missile landed in a civilian area in Balochistan destroying several houses and injuring civilians

Has China constructed a new village inside Arunachal Pradesh? Not quite: How NDTV misled with its ‘exclusive’ report

Report China building a village inside Arunachal Pradesh was bought out by NDTV yesterday - and it turned out to be fake news
- Advertisement -

 

“BJP will ban burqa, beard, skullcap, azan”, says AIUDF chief Badruddin Ajmal after forming alliance with Congress and Left to defeat ‘communal BJP’ in...

Badruddin Ajmal alleged that if BJP comes to power in Assam again, it will destroy mosques, and put several restrictions on Muslims

Fact Check: Did the US State Department remove Fact Sheet on Coronavirus and China after Biden administration took over

After the Biden administration took over, many netizens noted a fact sheet the US state department had published on Covid-19 is missing

AIMIM’s West Bengal ally Islamic cleric Peerzada Abbas Siddiqui launches ‘secular’ party to contest West Bengal Assembly polls

Peerzada Abbas Siddiqui said that he met AIMIM Chief Asaduddin Owaisi who assured him full support in West Bengal

Gujarat Forest Dept to take legal action against Christian Evangelist Paul Dhinakaran over unauthorised use of the department’s logo

Website of Paul Dhinakaran claims of collaborating with the Gujarat Forest Department, a claim junked by the latter

Protesting farmer unions reject union government’s proposal to suspend implementation of farm laws for 1-1.5 years

The decision was taken in a meeting of the protesting farmer unions today, saying that they only want the repeal of the laws.

Farm Laws 2020: The need of the hour is balanced liberalization, to move beyond rigid ideologies

A balanced liberalization, based on the triad of truth, efficiency and compassion, may find a better tomorrow

Indian Express spreads fake news claiming there were internal objections to Adani Group winning all 6 airports: Read the facts

The civil aviation ministry said that same allegations made in the Indian Express report were already dismissed by Kerala High Court

Uddhav stirs up Belagavi issue, Shiv Sena activists stopped by police from removing Karnataka flag. Details

Police Commissioner said that Shiv Sena leader Vijay Dhavane had plans of delivering a provocative speech at Belagavi.

5 persons dead at Serum Institute of India fire incident, efforts on to control damage

Reports have stated that the fire incident happened at an under construction building and vaccine facilities are safe.

Two suicide bombers detonate themselves in busy Baghdad market killing six, injuring dozens

As per reports, this was one of the rare suicide attacks in Central Baghdad.

Connect with us

245,563FansLike
496,912FollowersFollow
22,800SubscribersSubscribe