Claim By JP Nadda That India's Per Capita Income Has Doubled Is Misleading

The President of the Bharatiya Janata Party (BJP), Jagat Prakash Nadda, claimed that India's per capita GDP has doubled and Madhya Pradesh (MP)'s GDP has grown 19.74% year-on-year, and its per capita income increased to Rs 1.24 lakh per annum.

Nadda was attending a press conference in Bhopal, MP on June 1, where he made these claims. He had stated these figures with context to the economic growth shown by MP. MP is known to be a part of the BIMARU states, an umbrella of the states of Bihar, Madhya Pradesh, Rajasthan, and Uttar Pradesh, which fall behind on economic indicators as compared to other states.

To understand the claim by Nadda, we need to understand the terminology behind GDP and its components.

Components Of GDP And Their Usage

The Gross Domestic Product (GDP) of a country is the standard measure of the production of goods and services by the country during a certain time period, in monetary terms. 'Per capita GDP' refers to the average income of individuals in a country or state's economy, and it is calculated by dividing the GDP of the country/state by its population.

Nominal GDP or GDP at the current price is the value of the goods and services produced in a country at the current market prices, which can distort the real picture due to inflation or deflation. It is an approximate measure of the country's income in that specified period of time. A country can acquire a higher income due to an increase in the quantity of production and also due to market inflation. This is usually used to calculate or compare incomes, tax revenues, expenses, etc, as explained by The Economic Times.

That's where real GDP comes in. Real GDP is the GDP at constant prices, which can be calculated by adjusting the nominal GDP for inflation using a base year's price as a constant. It does not factor in taxes or subsidies and gives a clearer picture of the country's GDP growth. Real GDP is the calculation used to measure any surge or drop in the welfare of citizens for comparison between two time periods.

Misleading Statistics

Nadda has used nominal GDP as a means to compare year-on-year growth, saying it has grown from 79,000 to 1.5 lakhs but nominal GDP cannot be used to compare growth as it includes the change in current market prices.

In March 2022, Chief Minister of MP, Shivraj Singh Chauhan, and State BJP President of MP, VD Sharma, also made the same statements about the 19.74% GDP growth in MP.

Here is the video where Nadda makes these claims.

This video was posted by the official channel of the BJP, and he makes these claims from 7:38 timestamp. He says that it was Congress' contribution that these states were known as BIMARU states and that Congress would bring down the numbers of the other states as well because of their failing economy.

Claim:

BJP President JP Nadda claimed that India's per capita income has doubled from Rs 79,000 to Rs 1.5 lakh, and MP's GDP has increased to 19.74% year-on-year.

Fact Check:

The Logical Indian Fact Check team verified his claims and found them to be misleading. There are two components of the GDP of a country, but Nadda has cherry-picked the one that is not used to calculate economical welfare.

RBI Data

We first referred to the Reserve Bank of India (RBI)'s data on per capita GDP in the country. We found that the comparison of these statistics by Nadda is misleading because he has picked up the GDP in nominal prices, and not real prices. The crossing of the Rs 1.5 lakhs is the GDP in nominal price, which is measured with the current market changes in price that include inflation, so it can't be used for comparison of year-on-year growth.

The data shows that India's per capita GDP at current prices has crossed the Rs 1.5 lakh mark in 2019-20. Data also shows that the per capita GDP in nominal prices was around Rs 79,000 in 2012-13, as Nadda claims, but it only crossed that mark in real GDP per capita in 2014-15. Comparing these two figures is not right, and can lead to a misleading statement that the GDP has doubled, which is what happened in this case.

Here Per Capita GDP (Current) means nominal GDP and Per Capita GDP (Constant) means real GDP.

According to the data obtained by the RBI Time-Series on Per Capita GDP, and by the PIB (Press Information Bureau) press release of the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation, India's per capita GDP in constant price, with 2011-12 as the base year is quite lower than Nadda''s claim of Rs 1.5 lakhs.

PM Modi's Promise

Prime Minister Narendra Modi, in 2017, gave us a New India 2022 to replace the 'Acche Din' that was scheduled in 2019, and now that 2022 is here, let's compare the state of the GDP to what he had promised. According to Strategy of India@75, he had stated that India would reach a GDP growth of 9-10% by 2022-23. However, the GDP growth rate in India is said to be at 6.4% in the current fiscal year.

Data On Madhya Pradesh

According to the Madhya Pradesh Economic Survey 2021-22, there has been a growth of 19.74%, with the economy going from Rs 9,76,281 crores in 2020-21 to Rs 11,69,004 crores in 2021-22, but again, these are in current prices, which include inflation, and is not the right standard to compare growth.

Nominal GDP cannot be used to measure year-on-year growth, only real GDP can. Hence, the statement is misleading.

The Logical Indian Fact Check Team verified JP Nadda's claim and found it to be misleading. India's per capita GDP at constant prices (real GDP) has not doubled even at estimated prices, and the nominal GDP had reached Rs 1.5 lakh in the 2019-20 financial year itself. MP's state economy in constant prices hasn't shown an increase of the claimed 19.74%, but the growth in nominal GDP in the state has been 19.74% but it cannot be used to compare year-on-year growth.

The way India calculates its GDP is sketchy too, with multiple economists saying that data is manipulated while calculating the GDP, with a lot of the data not taken into account. The Logical Indian also reported a 2019 interview of former RBI Governor Raghuram Rajan to CNBC TV18, where Rajan said that he had no idea what India's statistics are pointing at, and a revamp was required "to really figure out what India's true growth rate is".

If you have any news that you believe needs to be fact-checked, please email us at factcheck@thelogicalindian.com or WhatsApp at 6364000343.

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