An open letter to the UN High-Level Expert Group on Beyond GDP.
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The United Nations has appointed a High-Level Expert Group to develop indicators that “complement” GDP. The group includes serious economists (Stiglitz, Kaushik Basu, Nora Lustig) and their mandate is genuine. The problem is not the people. The problem is the word “complement.” It is the most consequential evasion in the entire initiative.
Complementing GDP means GDP stays. It remains the anchor. The dashboard of wellbeing indicators becomes decorative. It is a conscience-salving appendage. It changes nothing about how policy is made. Imagine a finance ministry choosing between two policies. If one grows GDP faster, they will choose it. No supplementary dashboard will override that choice. The incentive structure is unchanged. Stiglitz has been making the same critique since the 2009 Sarkozy commission. Fifteen years later, GDP is still the anchor. The current task force is the third or fourth iteration of this exercise. It is simply dressed in new institutional language.
The thesis of this essay is simple. You cannot make progress without discarding GDP. It must not be complemented. It must be replaced. This is a harder political ask. That is precisely why no intergovernmental body has said it plainly. This essay will.
The Omission
GDP measures the monetary value of marketed goods and services produced within a country’s borders. Nothing more. Simon Kuznets designed it in 1934. He explicitly warned against using it this way. He said national welfare cannot be inferred from national income. Bretton Woods ignored that warning in 1944. GDP became the standard for comparing national economies. The world has ignored the warning ever since.
The problem is not just what GDP omits. It leaves out unpaid care, ecology, cohesion, leisure, and security. The deeper problem is that GDP actively misrepresents reality in ways that distort policy. An oil spill increases GDP because cleanup costs register as economic activity. A nation that privatises its water supply and charges citizens more for it sees its GDP rise.
Consider a country that reduces taxes on essentials and improves efficiency. It enhances financial inclusion. India did exactly this with the 2017 Goods and Services Tax. Yet the measurement system saw lower prices as weakness. It interpreted welfare as decline, and the currency depreciated by 25-30%.
That last example is not hypothetical. India implemented GST in July 2017. The reform simplified a labyrinthine tax structure. It reduced rates on essential goods and dramatically improved compliance. Economic theory predicts that better governance should strengthen a currency. Instead, the rupee depreciated from ₹65 per USD to ₹88 over the following years. This happened even as India outgrew most global peers.
The measurement system punished good governance. It was designed to reward inflation, formality, and high prices. It was never meant to measure welfare. This is not a bug. It is a feature of the system and who it serves.
The Circular Logic
The World Bank and IMF use Purchasing Power Parity to compare welfare. The methodology suffers from a fatal logical flaw. This flaw should disqualify it from serious use.
PPP uses the very phenomenon it claims to measure (relative price levels) to determine the measurement itself. Higher currency values create higher local prices for traded goods. Higher local prices get interpreted as higher purchasing power. Higher calculated purchasing power justifies higher currency valuations. These then influence local prices. The circle is complete and self-sealing.
This circularity has a concrete consequence. Consider two purchases available to an Indian consumer. One is a ₹50 thali that feeds a family nutritiously. The other is a ₹4,000 branded appliance. A generic version costs ₹400 from the same manufacturer. PPP methodology counts the ₹4,000 formal retail price more heavily. This is because it is captured in survey data. The ₹50 thali is underweighted. The system systematically undervalues the currency that enables the more rational purchase.
India’s Price Level Index is 47.6 compared to America’s 100. This is not evidence of lower purchasing power. In reality, Indian consumers often have more power. They obtain equivalent goods and services at dramatically lower prices. The methodology inverts this advantage into an apparent disadvantage.
Countries are incentivised to overtax citizens and maintain high retail prices. They sustain inefficient formal markets. They do this simply to improve currency rankings. Good governance becomes a statistical liability.
The dashboard the UN expert group proposes will sit on top of this methodology. The foundation is rotten. Adding more indicators on top of it does not fix the foundation.
Blindness of GDP
India between 2014 and 2023 ran a historic poverty-reduction experiment. It is almost entirely invisible to GDP-based analysis.
The JAM trinity linked 550 million bank accounts, 1.42 billion biometric identities, and mobile phones. This created a digital public infrastructure. Welfare now flows directly without leaking. The Unified Payments Interface, UPI, was built on top of this. The cost of financial transfer fell from thirty dollars to fifteen cents. Direct benefit transfers saved $42 billion by 2023. Previously, this money disappeared between government intention and citizen delivery.
Free grain reached 800 million people without a middleman. Houses were built and ownership recorded without a bribe. Many families stopped paying rent, stopped buying grain, and accessed banking without brokers. They effectively doubled their real income.
None of this had a visible footprint in GDP. Income did not increase. Expenditure did not register in formal retail surveys. The welfare improvement was real, massive, and statistically invisible.
The result: 171 million Indians left extreme poverty between 2011 and 2023. India’s Gini coefficient, the standard measure of income inequality, fell to 25.5 by 2022. The United States stood at 41.8. China at 35.7. Every G7 and G20 nation ranked below India on income equality.
Yet India is still evaluated primarily by GDP per capita. This ranking places it far lower than its actual performance warrants. This is not a minor measurement error. It is a systematic blindness built into the instrument.
A dashboard of complementary indicators will not correct this. The indicators are still calibrated against a rotten GDP foundation.
The American Inversion
The same measurement failure operates in the opposite direction for the United States. GDP presents the US as the world’s wealthiest nation. By actual purchasing power for necessities, 30-40% of Americans live in distress. The official poverty line of $15,060 cannot capture this reality.
Consider a domestic worker in urban India earning ₹30,000 monthly. At official exchange rates this equals $341 per month. By American standards this appears impossibly low. But basic food items in the US cost 2-3 times more than in India. Housing in most American cities consumes $800-1,200 monthly from a typical working-class income. Healthcare functions as a permanent debt threat. A single emergency room visit costs $5,000-15,000. Student debt exceeding $1.7 trillion has deferred poverty across an entire generation.
The Indian worker has low fixed costs. They get subsidised food and cheap generic medicines. They retain more purchasing power for survival than an American earning five times more in nominal terms.
This is not a rhetorical inversion. An honest food-price purchasing power calculation shows this clearly. It uses necessities rather than luxury goods as the baseline. The official methodology weights formal prices and branded goods. This makes American poverty invisible and Indian welfare statistically unimpressive. Both misrepresentations maintain the fiction that GDP per capita measures human welfare.
Eighty percent of America’s population lives on just three percent of its land. This is not natural economic evolution. It is the consequence of policy choices in zoning, transport, and development. GDP records this concentration as growth. The human cost registers nowhere.
Politics of Broken Compasses
Measurement systems are not neutral technical instruments. They are political artifacts that reward certain behaviours and punish others.
Britain’s colonial census multiplied Indian caste categories from 272 to 360. This was not an attempt to understand society. It was an instrument to divide and control. The categories it created persisted long after the purpose was forgotten. They shaped Indian political life for generations.
GDP is a post-colonial version of the same phenomenon. It was designed for industrial economies. They have large formal sectors, high prices, and debt-oriented financial systems. Countries that fit this model are rewarded.
Other nations develop through informal markets, public digital infrastructure, and subsidised necessities. The system systematically undervalues them.
The nations that built this measurement system are now consuming themselves with it. The United Kingdom faces severe fiscal strain. As a developing economy in the 1980s, this would have triggered IMF intervention. France cannot pay its pensioners without borrowing at rates its own orthodoxy would condemn. Germany posted negative growth for two consecutive years while its industrial base hollowed out.
The United States carries $37 trillion in debt. It has no credible repayment mechanism. It relies on currency privilege. The measurement system calls this strength rather than a debt-financed illusion.
The warning system failed its creators. PPP calculations continued showing Western currencies as strong while underlying productive capacity deteriorated. The same instruments overvalued Western financial resilience while undervaluing India’s welfare. A compass that points the wrong way is dangerous regardless of who holds it.
Genuine Progress Beyond GDP
The UN expert group’s mandate asks for a dashboard of indicators to sit alongside GDP. This essay argues that is insufficient. What genuine progress beyond GDP requires is different in kind, not degree.
First, the primary anchor of policy must shift from production to welfare. This means a country’s headline number must measure whether people can afford to live. It must not measure what was produced and sold. This number governs budgets and credit ratings.
Second, the measurement baseline for purchasing power must use necessities, not luxury goods. Food, medicine, housing, and transport costs relative to income are honest measures. Branded electronics and retail surveys are not.
India’s UPI processes over 20 billion transactions monthly. This creates a data universe of actual consumer spending. It could support exactly this measurement. The expert group should use this data. They should not add more indicators to outdated surveys.
Third, welfare improvements that reduce costs must count as income. A family gaining free food, cheap medicine, and zero-cost banking gets a real income increase. Current measurement records this as nothing. Or worse, as a reduction in economic activity.
This single correction would transform how India’s development appears globally. It would also expose how American working-class welfare has collapsed behind nominally rising incomes.
Fourth, the expert group must say what its mandate prevents. GDP cannot be reformed from within. It must be replaced as the anchor.
Previous attempts include the Stiglitz-Sen-Fitoussi commission, OECD framework, and SDG indicators. All produced dashboards that complemented GDP. GDP has absorbed each challenge and continued unchanged. The problem is not the dashboard. The problem is that the anchor remains.
A Note on Timeline
This essay was not written in response to the UN initiative. The arguments were developed in a body of work written in 2025 (See References below). This was before the High-Level Expert Group released its 2026 report.
I documented the key flaws in real time. These included food-price PPP, the GST experiment, JAM invisibility, and circularity. Current systems failed to capture these realities.
The UN initiative is welcome. The experts appointed to it are serious. But the groundwork for progress has already been laid. It exists in academic economics and policy analysis. It is visible in the lived experience of countries like India.
The expert group has been asked to complement GDP. It should find the courage to replace it. The compass is broken. Adding more dials will not help anyone find their way.
The expert group is requested , accordingly.
References:
- Accidental Empire.
- India Preparing for World Minus One.
- America-Iran War Outlook.
- Gold Rush 2015.
- Silver and COMEX.
- Understanding a Trade Route in the 21st Century.
- New World Order Series.
Sent by email on 25 June 2026 at 17.10 hrs from India via gmail.