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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.


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.

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Abhishek Banerjee
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.  

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