India's GDP crossed $8 trillion.

[ito]

Buddy, I have spent hours arguing the merits of PPP with the Chinese trolls of this forum.

PPP has nothing to do with local currency specifically, the currency can be anything. You can have PPP in rupees, US dollars, Euros ,rubles whatever. PPP just reflects the domestic overall net price level for a basket of goods according to consumption patterns in the country relative to some other chosen country's currency (normally US dollar).

This is fine for per capita use to a large extent....but it is not good for international aggregate measure if the intention is to compare relative to other countries (which inevitably is what international measures do) on the same aggregate (total GDP). GDP per capita PPP is always superior to nominal per capita, but both have limitations depending on context.

But I am nit-picking you a little too much. Your overall sentiment is correct regarding domestic vis a vis global footprint of Indian consumption.

Yes..you are right PPP can be in dollars, rupees or euros so can be Nominal. Dollar is just a measure.

PPP is how much rice you can buy for a dollar in India as compared to the dollar spend in US. In India, you get 2 Kg of rice for a dollar. while you spend $2 for buying 1 Kg of rice in US. So, you are well off with one dollar in India than you are with one dollar in US. This is reflected in PPP, while it is not in Nominal.

 

[majid mehmood]

and Pakistan is at $.95 trillion
but congrats to indian

 

[ThaniOruvan]

Comparing one country's GDP with the other is absolute BS.
Can you say goods purchased and their value for one rupee and one yuan are the same ?
One rupee inside Indian economy and one yuan inside the chinese economy have lots and lots of different meaning and impact. I do not know which genius found the practice of listing all countries' GDP in terms of Dollars and ranked them.
Of course Dollar is a universally traded currency but that cannot be used to measure the prosperity and well-being of any country except the US.

On the topic. This $8 Trillion is the PPP GDP which is good for nothing. Only Nominal value and per capita income matters. We did good, we have to do better.

 

[ito]

Yes but most of the foreign trade is done in dollars hence the nominal becomes important.

India's buying power depends on dollar, but the welfare of people is not. US GDP (Nominal) per capita is $50000 while India's is $ 2000, but they are not comparable. $ 2000 in India buys you 5 times what you can buy in US. Hence PPP is a better measure to compare economies than nominal, as PPP takes the purchasing power of the currency into effect.

 

[Nilgiri]

PPP is how much rice you can buy for a dollar in India as compared to the dollar spend in US. In India, you get 2 Kg of rice for a dollar. while you spend $2 for buying 1 Kg of rice in US. So, you are well off with one dollar in India than you are with one dollar in US. This is reflected in PPP, while it is not in Nominal.

This is what I mean by relative price levels.

a) making a composite price level is unique for each country because of different spending patterns of the average citizen worldwide

b) thus PPP is only meaningful on a personal consumer level compared to aggregate. Its fine if we are able to consume 1 unit of wheat per person with effectively fewer US dollars compared to an American at a ratio of a third (according to ICP data from 2011)....but our consumption impact on a TOTAL country level is still unchanged on an international level. That Indian wheat isn't suddenly 3 times more valuable internationally, nor can we consume 3 times the wheat that we do with the PPP dollar on the global market at global prices (which is what aggregates are used for 90% of the time).

 

[Chinese-Dragon]

Sure,according to PPP you are

LOL yes, "according to PPP".

But we are not the number 1 economy in the world, not by quite a large margin.

 

[ito]

This is what I mean by relative price levels.

a) making a composite price level is unique for each country because of different spending patterns of the average citizen worldwide

b) thus PPP is only meaningful on a personal consumer level compared to aggregate. Its fine if we are able to consume 1 unit of wheat per person with effectively fewer US dollars compared to an American at a ratio of a third (according to ICP data from 2011)....but our consumption impact on a TOTAL country level is still unchanged on an international level. That Indian wheat isn't suddenly 3 times more valuable internationally, nor can we consume 3 times the wheat that we do with the PPP dollar on the global market at global prices (which is what aggregates are used for 90% of the time).

Yes..you are spot on...PPP is superior to Nominal, but measuring PPP is very hard as you have pointed out...such as making a comparable consumption basket is hard across countries.

 

[Nilgiri]

LOL yes, "according to PPP".

But we are not the number 1 economy in the world, not by quite a large margin.

No one is comparing Indian PPP total to Chinese nominal total.

Apples and Oranges, choose one system when comparing, stick with it, know the limitations of chosen system.

 

[ito]

LOL yes, "according to PPP".

But we are not the number 1 economy in the world, not by quite a large margin.

You don't know lot of things...this is one. I guess you, after seeing so many of your posts, is always confused between Nominal and PPP

 

[Viper0011.]

Report for Selected Countries and Subjects

According to the new figures released by IMF on 6th Oct, India's GDP crossed $8 trillion

I think the real number is around or over 6.5 T. Indians have been inflating their FDI numbers a LOT. They show offshore IT labor's salaries as "FDI" . Go figure!!!

Please do some more research and post real numbers, Thank you!! No one hates India's growth btw (before the entire 1 billion key board warriors call my post anti-India). We are happy for you, just don't bullshit us and post the real numbers, which are still massive even at 6.5T!!!

 

[Nilgiri]

Yes..you are spot on...PPP is superior to Nominal, but measuring PPP is very hard as you have pointed out...such as making a comparable consumption basket is hard across countries.

Yup, hence aggregating PPP poses a big problem in comparing between countries...mostly because the basket of goods in the "consumption" portfolio vary from country to country. If every country had the same exact pattern of consumption, then PPP would become the magical absolute super measure...and in fact we would not need PPP at all, since nominal could be used and exchange rates would be automatically reflective of the differing price levels (assuming complete free trade).

But we live in imperfect world, so different measures have different strengths and weaknesses.

 

[ito]

I think the real number is around or over 6.5 T. Indians have been inflating their FDI numbers a LOT. They show offshore IT labor's salaries as "FDI" . Go figure!!!

Please do some more research and post real numbers, Thank you!! No one hates India's growth btw (before the entire 1 billion key board warriors call my post anti-India). We are happy for you, just don't bullshit us and post the real numbers, which are still massive even at 6.5T!!!

I am quoting IMF...what is reliable to you?

 

[Bussard Ramjet]

what?
@Bussard Ramjet
It seems that India's 8 trillions will surpass China's 10 trillions soon.

Different measurements both are.

And both have different advantages and shortcomings.

But if one wants to look at the raw economic power of a Nation, the best metric still is nominal dollar based GDP figures, where India has a GDP of around 2 trillion dollars.

If one wants to look at the standard of living in a Nation, the better metric is GDP PPP per capita.

 

[CHN Bamboo]

Different measurements both are.

And both have different advantages and shortcomings.

But if one wants to look at the raw economic power of a Nation, the best metric still is nominal dollar based GDP figures, where India has a GDP of around 2 trillion dollars.

If one wants to look at the standard of living in a Nation, the better metric is GDP PPP per capita.

About PPP,Chinese gov is not that honest,I can only say that.

 

[Nilgiri]

I think the real number is around or over 6.5 T. Indians have been inflating their FDI numbers a LOT. They show offshore IT labor's salaries as "FDI"

Yes yes. The FDI Inflation accounts for 1.5 trillion dollars...and the IMF is none the wiser about it.