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The much-vaunted bubble: How real are the economic data released by the Modi government?

author:Bao Ming said

Since last weekend, India has held a five-year general election, with 970 million registered voters, so the general election will be held in seven stages until the end of voting on June 1 this year, and the results will be announced on June 4. The current Prime Minister Modi and his Bharatiya Janata Party (BJP) are determined to win, and foreign media generally believe that Modi will win a third term as prime minister, and after ruling India for 10 years, he will rule India for another five years. Let's start with India's electoral system: India is a federal republic, the president is the head of state, but his duties are symbolic, and the real power is held by the prime minister. The Prime Minister is nominated by the majority party in Parliament to the President, who in turn appoints him. Therefore, the general election in India is actually a general election in the "Lok Sabha" of parliament, and any political party or coalition of parties can form a government as long as it can win more than 273 of the 545 seats in parliament. Mr. Modi's Bharatiya Janata Party (BJP), which has a majority in most states, has more than 70 percent support in national polls, and is aiming for a two-thirds majority of seats. Therefore, the suspense of this Indian election is not large, and Modi and the Bharatiya Janata Party will most likely win. By contrast, the Congress party, led by Rahul Gandhi, and a host of smaller parties are incompetent, helpless and powerless to shake the position of Modi and the BJP.

The much-vaunted bubble: How real are the economic data released by the Modi government?

Observing and analyzing the actions of the Modi government in recent years, it can be seen that it won the election mainly by two tricks:

The first is to do everything possible to arouse nationalist sentiment among Hindu believers, unite the majority of Indians, and do things that previous Indian governments have not been able to do, such as currency reform, tax reform, and army reform. Although these reforms have had their successes and failures, they are generally in the right direction. However, Hindu nationalism has a tendency to develop towards Nazification, and the "canonization" of Modi is very likely to provoke a backlash from non-Hindu minorities. After all, there are more than 200 million Muslims and tens of millions of Sikhs in India, and there are still a large number of Southeast Asian ethnic minorities in the northeastern states, and under the discriminatory policies of the Modi government, most of these ethnic groups have separatist tendencies, and some have even established separatist organizations, such as the Sikh Kalistan movement, not to mention Muslims.

The much-vaunted bubble: How real are the economic data released by the Modi government?

Another "magic weapon" for Modi to attract popular support is to brag about the various "achievements" of the current government, especially various economic growth figures, and he likes to be the most proud of China's GDP growth rate. Some media have long pointed out that many of the data released by the Indian government are unreliable. There are many "jokes" circulating on the Internet about the falsification of India's economic data, such as the total length of highways multiplied by the number of lanes, and the fact that they use cow dung as fertilizer to include in GDP at "market price", etc. Some Western media have exposed it more professionally, and recently the British "Economist" published an article pointing out that India's GDP growth rate has too much moisture, and India's high economic growth has been exaggerated for a long time. When calculating GDP, the Indian government first counts nominal GDP, i.e., GDP at the current value of money, and then deflats according to the degree of inflation.

The much-vaunted bubble: How real are the economic data released by the Modi government?

The problem is that different sectors in India use different deflators, which is easy to falsify data and artificially inflate GDP. Specifically, the first is that the deflator is flawed, for example, most industries in India use the wholesale price index WPI as the deflator, but the WPI itself does not include the price of the service industry, but is widely used in the hotel industry, software outsourcing industry and other service industries; from 2011 to 2019, the CPI growth rate of India's consumer price index was 20 percentage points higher than the GDP deflator, which indicates that India's GDP deflator is underestimated and the GDP growth rate is overestimated. Another problem is that the deflator is flawed, resulting in a large error in India's calculated GDP growth rate. India mainly uses the "double contraction method" in the price index reduction method to carry out price deflatoration, because the preparation of the intermediate input price index is more difficult than the preparation of the total output price, the intermediate input price index must have a statistical error, this error will directly cause the output value of India's manufacturing industry to be overestimated.

The much-vaunted bubble: How real are the economic data released by the Modi government?

According to The Economist estimates, India's GDP growth in the fourth quarter of fiscal 2023-2024 is closer to 6.5% than the 8.4% claimed by the Indian government, and India's real GDP has grown at an average annual rate of 4.2% since the pandemic in December 2019, rather than as the Indian government claims. The Modi government's whitewashing of GDP figures has really deceived a large number of Indians into believing that as long as Modi remains in power, India can become a "superpower" in the near future. The reason why many Western media want to expose the falsification of economic data by the Modi government is because the Modi government is not obedient enough to continue to provoke conflicts on the Sino-Indian border, and still maintains economic and trade relations with Russia, so Modi must be beaten. But knock to knock, when Modi really wins the election, Western countries will continue to woo him, after all, India is the world's most populous "democracy".

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