Per cent GDP? Are our metrics showing us the truth?
I wrote an article investigating how much our government earns and how much it spends on essentials. And as any other person would do, I turned into the most obvious metrics.
Although I understood that the net revenue of our government was far less than what the nation needs. Which is partly because 99% Indians aren’t paying taxes. While 45% Americans aren’t paying taxes. Staggering difference.
But today, I want to highlight another fact. I think the metric I used: % GDP spend, is rather wrong. Think about it this way, you are a stock market trader, an underperforming one. You clock 5% returns. You have a friend, who clocks 20% returns. Your capital is huge. His capital is small. But your returns aren’t that big. Because how less in % they are. You both buy an iPhone. End of day, when you compare, you do not compare on what percentage of profit you spent on iPhone, but what %age of initial capital you did. And your ratio will never be as good as your friends.
Same is the case. Let’s see what percentage of Nominal GDP is each big economy’s budget around?
- USA : 28%
- China: 25%
- Japan: 33%
- Germany: 45%
- UK: 34%
- India: 15%
And since US has the greatest deficit among the countries, don’t think their 28% is less than any of the country mentioned here. These are the top few economies of the world. Let’s look at some less obvious ones:
- Pakistan: 17%
- Bangladesh: 22%
- Afghanistan: 12%
Well, I hope you understand where I am going. Our Healthcare spend this year was 1.8% of Nominal GDP. Now think what each country’s spend in % of government budget would look like?
- USA: 29%
- China: 12%
- Japan: 25%
- Germany: 19%
- UK: 22%
- India: 12%
- Pakistan: 5%
- Bangladesh: 10%
Do you see how the numbers changed. And I think we still lack behind. We need to improve, but the fact is that this is the correct metric. Government can not go about spending 8% of GDP on health when all they have on plate is 15% of GDP.
INCREASE NUMBER OF PEOPLE PAYING TAXES. INCREASE THE REVENUE OF GOVERNMENT. REDUCE CORRUPTION.
There are deeper problems. Not just government spend being less. We are so so underperforming as of now. More individuals have to pay taxes, now that might mean a lot of communities getting mad on government. But this country has to have a bright future. There is no shortcut to that.
Next time you hate Modi / Rahul / Mamta, think along these lines too. I often see that the problem with this country is absolutely poor journalism and absolutely poor emotional IQ of citizens.
I will investigate more and post other articles too. But these numbers are worth thinking about. Both as a citizen who’s doing less, and a citizen who’s not keeping government employees, ministers, accountable.
I appreciate you reading this. If you would like to have a conversation about this, float some ideas, educate me about these spends, tell your experience, drop me an email (email@example.com). I will be very happy to talk about it.
If you feel that whatever is going around is too much and you need to talk to someone, please feel free to schedule a call with me or hit me up on WhatsApp/Instagram. I will be happy to just listen, vent out everything and I think you will feel a little better.