 When a poor country like ours sees rapid economic growth, as we supposedly have, then some key sectors ought to grow at more or less the same rate as the overall growth in our economy or what we call GDP. Among these are electricity production, overall factory production, production of key inputs like cement, coal and steel, the total amount of loans given by banks, whether to industry or consumers, sales of homes and commercial real estate, sales of consumer durables such as cars, gadgets and home appliances, sales of soaps, shampoos, toothpaste, things that are known as fast-moving consumer goods of FMCG. Along with that, a fast-growing economy also has a fast-growing telecommunication sector. And Tesc's book economics tells us that high growth leads to high demand for labour which pushes up wages. So wages paid to workers should also go up at more or less the same pace as economic growth because unless wages grow, the growth in national income will not get shared amongst the actual people who produce the goods and services that make an economy grow in the first place. So to cut a long story short, all these indicators ought to grow at more or less the same rate as GDP growth. Let's see if that has happened in India in the past few years. I'm removing the last three years since COVID struck us from these calculations because COVID caused big disruptions and one could argue that the data has got messed up because lockdowns caused the economy to actually contract in 2020-21 instead of growing. So I will focus on the five-year period that preceded the pandemic to remove any data anomalies. Let us start with GDP. In the five-year period between 2014-15 to 2019-20, our GDP grew at an annual rate of 6.7%. That is not a blistering pace but it is pretty good when one compares it with the rest of the world. Now to achieve the space of economic growth, one of the biggest things India needed was to consume a lot of energy and there are three main sources of that, coal, electricity and petrol. Our coal production in this five-year pre-pandemic period grew at just 3.5% per year, almost half the GDP growth rate. Electricity generation grew at just 4.6% per year, more than 2 percentage points lower than GDP. And petroleum consumption grew at just 3.3% per year, less than half our GDP growth rate. So who knows perhaps our factories and offices have become supremely energy efficient. They can produce more using less energy. The trouble is that our overall factory sector has performed abysmally. We can measure that using an indicator called the index of industrial production or IIP for short, which is released every month. Between 2014-15 and 2019-20, the IIP in manufacturing has grown at an annual rate of just 2.8%, again much less than half of the official GDP growth rate. Important inputs like cement and steel also grew at a very slow pace. This slowdown has been mirrored by the slowdown in bank loans to industry because if corporates are keen on expanding, they will take loans and the reverse is equally true. If they feel there's no demand for their goods or services, they won't need to take loans. The second thing is what appears to have happened. Bank credit to industry grew at an annual rate of just 2.1% between 2014-15 and 2019-20. But we have one more step to take before we can compare this figure of bank credit with GDP growth. Why? Because we have to remove the effect of inflation from it. Because GDP growth is always real growth adjusted for inflation. If we adjust this for inflation, bank credit to industry in this period went down at an annual rate of 2.1% instead of increasing. But personal loans grew at a fast pace. Home loans for instance grew at a real inflation adjusted rate of 7.1% which was a shade faster than our GDP growth rate. Does that mean home sales grew faster than GDP as well? No, not at all. In fact, home sales in the top 7 cities for which data is collected by private entities fell at a rate of 5.3% per year. This suggests that the average size of a home loan would have increased while the total number of home loans might have fallen which explains why the app total has gone up. That in turn suggests that the rich were taking loans to buy big houses while the middle classes were giving up on the dream of owning their own home. So if they weren't paying AMIs every month, surely India's middle classes had more money in their hands to spend more on other things like cars and appliances and gadgets? What happened there? Nothing. Passenger vehicle sales grew at a measly 1.3% per year in this 5 year period. Two wheeler sales grew at just 1.7% annually. And loans for consumer durables which I'm using as a proxy for the sale of consumer durables grew at just 1% per year. And again, we have to adjust it for inflation. If we do that, it actually fell at an annual rate of 3.1%. What about the sales of FMCG, a fast-moving consumer goes like soaps and shampoos? I should look at the sales figure of India's biggest FMCG company, Hindustan Unilever or HUL to gauge the trend. HUL's total sales grew at just 4.7% per year in the 5 year period between 2014-15 to 2019-20. Adjust that for inflation again to compare with GDP and the real increase in sales volume is barely half a percent. Why did this happen is because people's real income didn't really grow in this period. Take wages for instance. Federal wages for construction workers grew at a real inflation adjusted rate of just 0.1% per year. Wages of agricultural workers grew at just 0.7% per year in real-time. Of course, some people would point to the massive growth in telecom as a sign of robust economic growth and it is indeed true that the average telecom consumer's minutes of usage has shot up in the past 7 to 8 years. In the 5 year period that we are looking at, the minutes of usage grew at nearly 13% per year almost double the rate of growth of GDP. But as we all know this happened because of a cutthroat price war in the telecom sector which caused the average revenue per user to drop at a rate of more than 9% per year. So people used more data because they got it almost for free. In fact, this growth in data usage did not lead to any significant rise in the number of telecom subscribers in India. That number grew at just 3.4% per year, again almost half our GDP growth rate. All this tells us that there is something seriously wrong with the way in which we measure GDP. Almost every other indicator has grown at a significantly lower pace than the rate at which our economy is supposedly going. It tells us that India's growth rate is a mirage, it's not real. That's the show today, do subscribe to our channel, don't forget to press the bell icon so that you can get to know as soon as a new video is uploaded and support us. There are various subscription options, it will help you get the real news. Until next time, goodbye.