HOW 'OVERESTIMATED' GROWTH DATA HITS YOU

If you belong to a middle-class family and like to keep a check on prices of your monthly groceries, you may have noted a few things. Assuming you are consuming same quantity of items, your monthly bills continue to rise. When you pick up a financial daily, you notice inflation rate in the economy is at a record low. Then you wonder about affordability and ask yourself whether you are earning enough to cover all expenses.

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For the decade to 2023, the dominant narrative has been that India was an oasis of a large economy, with a growth of 6-7%. For many households, reality on the ground has felt like a “puzzle”. Those in white-collar jobs wondered about lack of opportunities in an otherwise booming economy.

A new paper coauthored by former economic advisor Arvind Subramanian suggests the answer is simple: growth was not as strong as reported. Their research indicates since 2011 India’s true annual growth has likely been between 4% and 4.4%, a major drop from the official 5.9%. While a 1.5-2% difference might sound like a rounding error to a statistician, in the world of personal finance, it changes how you should manage your money.

Your income and slowdown