Fact Check: India’s Economy Is Not Doing Better Than The US And Canada; Here Is Why Figures In Social Media Are Wrong

There is a debate raging in social media about the declining Indian economy. One of the claims is that India has is faring much better than Canada and US. Here is why this is wrong.

Photo: Getty Images

New Delhi: India recently reported a Gross Domestic Product (GDP) contraction of 23.9 percent for the first quarter of 2020-21. It has come as a big setback especially as the country is reeling under the Covid 19 pandemic. The opposition also hit back at the government and said that it was a 'matter of shame'. The numbers also triggered another raging debate  in social media about #GDPTruth. One of the most popular claims is that despite such a massive contraction in the Indian economy, it still did better than countries such as the US and Canada.

Images and videos are circulating in social media that claim to have actual figures of India’s GDP. A graphic depicting economic contraction of different countries by Business Today has gone viral with the claim that it is peddling fake information.

But while many people have enthusiastically shared these claims, it has turned out to be false information. Here is why the claims are untrue? Most of the viral posts depict annualised figures. That is an estimate is created for an entire year to make comparison easier. In the US this is done by doing a quarter to quarter (Q-o-Q) analysis. The US would calculate by comparing the quarter to the quarter and then use the figure to derive an annual estimation. According to the US Bureau of Economic Analysis 'BEA publishes estimates of levels at annual rates (for most series) for ease of comparisons with related and historical data.' It also says 'Quarterly seasonally adjusted values are expressed at annual rates, unless otherwise specified.  This convention is used for BEA's featured, seasonally adjusted measures to facilitate comparisons with related and historical data.' The BEA has also specified that 'A quarterly percent change at an annual rate shows what the percent change would be if the quarterly rate continued for four quarters. It is computed by compounding the quarterly rate for four quarters.' Whereas India calculates its GDP year-on-year (Y-o-Y) i.e. it compares the current year quarter to the year before. So, comparing these countries with India will not give an accurate picture. The figures shared by  IMF chief economist Gita Gopinath have also confirmed that India recorded the steepest decline in the GDP growth compared to other countries such as Russia, the US, Canada, Japan, Australia, and Brazil. This is also based on QoQ data rather than a comparison between anuualised and quarterly figures.

In #GreatLockdown Q2 2020 GDP growth at historical lows. Graph puts G20 growth numbers on a comparable scale, quarter-on-quarter non-annualized. Should expect rebounds in Q3 but 2020 overall will see major contractions. China recovers strongly in Q2 after collapse in Q1. pic.twitter.com/OcgaZsrAD6

— Gita Gopinath (@GitaGopinath) September 2, 2020