Gita Gopinath International Monetary Fund (IMF) chief comment in the context of cut in GDP growth rate projection for the world between June 2019 and January 2020. She said it is simple "arithmetic" that India contributes to 80% to the global slowdown.
That simple arithmetic arises from the following figures of projected GDP growth rate and the cut in the projection over June 2019 figure:
World: 2.5%, a cut of 0.2%
US:1.8%, goes up by 0.1%
EU:1%, a cut of 0.4%
Japan: 0.7%, unchanged
India: 5.8%, a cut of 1.7%
China: 5.9%, a cut of 0.2%
Russia:1.6%, a cut of 0.2%
Brazil: 2%, a cut of 0.5%
But Is the projection of world GDP as simple as percentage point cut or rise in an individual country's GDP growth rate, irrespective of its size, and its share in global businesses?
For example:
0.2% of China's GDP for 2018 gives us a figure of $27,216.30 million. Similarly, 1.7% of India's GDP would stand at $46,218.44 million.
The cut of 0.2% in the world's GDP means a loss of $171,819.63 million from earlier projection. An 80% of this figure comes at, in simple arithmetic at $137,455.70 million. But India contributed a loss of only $46,218.44 million.
Why this irregularity?
The answer may be hidden in India's economic strength or weakness - it is the seventh biggest economy of the world but according to the World Bank data released on December 23, 2019, it has a little over 3% share in the world GDP.
As per the world bank data, world GDP for 2018 stood at $85,909,816 million. India's GDP for 2018 stood at $2,718,732 million. This makes India's share in the world GDP at 3.16%.
For a better perspective, the US's share is 23.91% followed by China's at 15.84%.
GDP growth is like a run of conveyor's belt. Its speed determines the GDP growth rate. The speed and strength of conveyor's belt are also the indicators of world's business. So, it is natural that any object on the conveyor's belt will exert more influence than its strength because it is part of the chain. It may pull down the speed or add to the speed under different circumstances.
India's share in world trade:
Also Read: IMF chief economist Gita Gopinath says India responsible for 80% of slashed global growth estimate
In June 2019, when US and China seemed determined to punish each other over trade and tariff differences, Union Commerce and Industry Minister Piyush Goyal told the Lok Sabha in a written reply that India's share in global trade (merchandise and services) was 2.1% for exports and 2.6% for imports in 2017.
In terms of the exact value, India's export stood at $481.74 billion out of total $23,044 billion while import was of $600.62 billion out of total $23,112 billion.
Official figures show that during April-November 2019-20, India's exports actually contracted by 2 per cent to $212 billion. Import too has declined. India does not have such a standing in world trade compared to that of the US and China.
Despite Gita Gopinath's accusation and statement, India is responsible for pulling down world GDP growth rate by 80% appears just a wrong narrative of Indian economy.