India farther away from its $5-trillion goal

According to statistics the Indian government released on Monday, from April 2020 to March 2021, India's gross domestic product decreased 7.3 percent over its previous fiscal year. Previously, the government had projected that India's GDP would contract 8 percent.

That means the country's GDP over the past fiscal year was about $2.6 trillion, roughly 20 percent that of China during the same period of time.

As a matter of fact, to make India's GDP look better, New Delhi has modified its statistical approach in 2015 and 2018 to make the market price the statistical basis for the calculation of GDP, rather than the cost of production factors.

Calculating GDP on the basis of the cost of production factors can more accurately reflect the changes of different sectors, while the market price basis statistical method means many items that would not have been included previously will be evaluated and incorporated in the GDP calculation.

By including products that were not included in the statistical scope before, the government can increase the total GDP. For instance, using the new statistical method, the vast areas of slums in India are now included in the country's GDP as real estate property.

The other change is the statistical period is no longer a civil year, but the fiscal year. This was "political tampering" to give the government a pre-election boost.

The modification of the statistical methods in 2015 and 2018 yielded immediate effects raising the country's GDP growth over the past few years to a high level of about 5 percent to 7 percent, paving the way for Indian Prime Minister Narendra Modi's reelection in 2019.

Thanks to that, India overtook France and the United Kingdom in 2019, when its GDP surged to $2.9 trillion, becoming the world's fifth-largest economy.

No wonder many argue that the Modi administration's adoption of the new statistical approach was political manipulation

But even applying the new statistical methods, India's GDP last year fell back to the seventh in the world again, surpassed by the UK and France. And if its former statistical methods were used, India might have been overtaken by Italy slipping to the eighth in the world's GDP rankings last year.

In 2019, Modi vowed to raise India's GDP to $5 trillion before 2025, and $10 trillion by 2032. That means on the basis of its exaggerated GDP in 2019, the country has to maintain an average growth of over 8 percent each year up until 2025.

Lowering tax to attract investment is the main policy his government has taken to boost growth. However, the raging pandemic and the worsening of its relations with China, a major source of its foreign investment, have both made Modi's ambitious goals increasingly unattainable.