Author: Tuhin A Sinha | Steve Rajpurohit
There has been a lot of hullabaloo over India’s GDP numbers lately. What began as questions about the methodology of India’s GDP estimates, when fact-checked, has turned into a rejection of GDP itself as a measure of living standards. But perhaps they are partly right. GDP is not, after all, a perfect measure of living standards.
GDP is designed to measure the market value of goods and services produced in an economy. GDP today measures the market ingredients you bought to prepare your meal. Its foundations were laid in the 1930s through Simon Kuznets’ pioneering work on national income.
However, in 1965, Gary Becker, in A Theory of the Allocation of Time, argued that time is as scarce a resource as income. The true cost of a meal, therefore, also includes the opportunity cost of the time spent preparing it. And what has fundamentally changed since 2014 is not simply the level of income, but the economisation of time — doing more with the same hour, spending less of it on necessary tasks, and extracting greater welfare from it.
The first way to understand this is through the utility of work. India’s digital transformation is a good example. The significance of the JAM trinity is not simply that India has created a large digital payments industry. Today, Gen Alpha visits bank branches so rarely that they write viral blogs when they visit one. An autorickshaw is at your doorstep whenever you need one. These gains in time and productive efficiency are real improvements in economic welfare, but they are not fully captured by GDP.
Digitisation has also weakened Baumol’s cost disease-the tendency for labour-intensive services to become relatively more expensive because their productivity is difficult to raise. Today, a singer does not have to perform four concerts to reach four different audiences. As a result, singers performing in local dialects can achieve national virality, while music and films have become accessible to a far wider audience rather than remaining forms of luxury consumption.
Robert Gordon added a second layer to productivity: the reduction in the disutility of work-the effort, fatigue and physical discomfort associated with earning an income. India’s growing access to appliances shows this playing out on the ground.
Among the bottom 40 per cent of households, AC and air-cooler ownership rose from 2.1 per cent to 16.9 per cent in rural India and from 11.4 per cent to 32.4 per cent in urban India between 2011-12 and 2023-24. Washing machine ownership rose from 0.5 per cent to 6.1 per cent in rural areas and from 5 per cent to 24.1 per cent in urban areas. GDP counts the appliances purchased, but not fully the physical effort, discomfort and household burden they remove.
Once productivity rises and the burden of work falls, a third benefit follows: people can allocate their limited time differently. India’s infrastructure expansion has a huge role to play in this. India’s operational metro network grew from 248 km across five cities in 2014 to 1,095 km across 26 cities in 2025. A CRRI study found that Delhi Metro commuters who reported time savings saved 28 minutes on average per journey.
The WHO estimates that improved household access to safe water under the Jal Jeevan Mission could save 66.6 million hours of water-collection time every day, much of it for women and children. GDP captures the construction and operation of the infrastructure; it captures far less of the value created when millions of people simply stop losing their time to commuting or collecting water.
What people do with this released time matters just as much. India’s Time Use Survey shows that between 2019 and 2024, average time spent on employment and related activities rose from 164 to 180 minutes a day, while own-use production fell from 26 to 20 minutes and culture, leisure, mass media and sports rose from 143 to 159 minutes. The same finite resource, time, is being reallocated towards both productive activity and leisure, which increases productivity.
Another major consequence of these changes is greater welfare from the same rupee. This is related to the idea of consumer surplus-the difference between what a consumer is willing to pay for a good or service and what they actually pay. An economy can therefore make households better off even without a proportionate increase in their nominal income if competition, technology and better distribution allow the same rupee to buy more.
India’s shift towards supermarkets, e-commerce and quick commerce illustrates this. Consumers can compare prices, access greater variety and search without travelling between shops. The same product can be cheaper and arrive without a trip to the market. The rupee has effectively become more valuable, even though its denomination has not changed. This becomes even more significant when we consider quality improvements. A smartphone bought today for a price comparable to that of one bought a decade ago is vastly more capable. The value consumers derive from innovation can therefore rise much faster than the amount they actually pay for it.
This brings us back to the original question: what should we expect GDP to measure? If the question is the value of goods and services produced through market activity, GDP remains indispensable. But if the question is whether people’s economic lives have improved, GDP is necessarily incomplete.
It does not fully capture the value of time saved, physical effort avoided, greater comfort or better consumption choices. In that sense, expecting GDP alone to measure economic progress is an oxymoron: an indicator of economic output is being asked to measure the entirety of economic well-being.
Yet these limitations do not diminish GDP’s importance; they merely remind us of what it was designed to measure. GDP may not be a perfect measure of economic progress, but it remains the least imperfect one we have.
Tuhin A Sinha is a national spokesperson for the BJP and an acclaimed author; Steve Rajpurohit is a public policy analyst; Views presented are personal.