GDP, GDP , GDP ......?

In current times, most common matter for discussion after weather is GDP. All media channels, newspapers, magazines etc. are full of this word. Every one in our country has become economist along worth the politician. But do we really know about the GDP? Is it important factor and where do we stand in terms of GDP in world economy . 

Although I am a layman as far as economics is concerned but still would like to share my views with little knowledge acquired from here and there. 

Let's analyse bit deep this GDP. 

What is GDP. : Gross domestic product is a value of all goods and services produced by a country in a specific period commonly annual. This helps In understanding the economic size of a country . Our country’s GDP was 2.935 tn usd in 2019. We are 5th Rank in size of economy after US, China, Japan & Germany. 

Now the question arises is what is the importance of GDP and does it really indicates perfect economic situation.

GDP reflects size of economy and hence the market of that country also. In that sense  GDP indicates overall volume of a country if we talk in laymen language irrespective to the size of population. It is just like a income of a family irrespective to the number of dependants. So we can say that yes to understand the size of a country it is important but this is only partial observation.  In fact it confuses with prosperity. We are always taught that the higher GDP will make us rich. This is not fully correct. The GDP is only one factor in deciding the prosperity of a nation. If we divide GDP by the population of a country we can arrive at the per capita income of its' citizen. 

We are ranking  5th in GDP size but if we look at per capita income then we rank at 127 i.e. far below many nations. Our per capita income is 2172 USD as against 8000 USD average level. If we analyse the economy by per capita we are far below the average of the world. In that sense our situation is too dismal. 

In fact the economic analysis of any country should be based on both the above parameters and not one factor only. Considering the population size we are far below average. Whatever be the growth it will take long time to even touch the average mark. 

Also the economic parameters should be mixed with the other factors like freedom, political situation, happiness level, education, mortality age, health care , infrastructure etc. to understand the real situation of economy in any country. 

Hence in my view defining ourselves at number 5 is of no use rather misguiding considering the per capita income. 

CP