Modi failed almost all his promises for the first 2 terms, now, for the third term, his major promise is to make India the third economy, well, it is an empty pie again, and here is why:
The United States spends 23% of its GDP, which is about $6.5 trillion. China also spends 23% of its GDP, totaling $4 trillion. India, with a smaller economy, spends less, allocating about 15% of its GDP, which amounts to $580 billion for 2024. Although India's total GDP is $3.73 trillion, roughly 1/4.6 of China's, the amount it can spend is about 1/6.9 of China's expenditure.
How much money a country can spend is crucial for its development and national defense, as it reflects a country's real strength. While you may inflate your GDP numbers to make them appear larger, you cannot spend inflated figures. You may claim that you surpassed the UK in GDP, but the UK's budget is $1 trillion a year, which is 1.72 times that of India. Therefore, for India, its GDP number does not mean much since it cannot reflect its real strength, if we assume India actually also spend 23% of its real GDP, then the real GDP of India is $2.52 trillion. Rank number 8 in the world, after France 's $3.1 trillion, therefore, Modi's promise to make number 3 will remain as a dream
Calculation based on total tax revenue:
interesting numbers, India claims its GDP is $3.73 trillion, China is $18 trillion, therefore for GDP, China is 4.8 times larger, however, for total tax revenue, India is $421 billion, China is $2.8 trillion, that is 6.5 times of India, then for how much a government can spend, India's budget is $580 billion, China is $4 trillion, that is 6.9 times of India.
What's more intriguing is that in 2014, India's total tax revenue was 16% of GDP. Under Modi, in 2023, this figure dropped to 11.1% of GDP. This suggests two possibilities:
The current government may not be able to collect taxes at the same rate as in 2014.
India's reported GDP figure might be inflated.
If we assume India's actual tax rate is still 16%, matching China's current rate and India's rate in 2014, then India's real GDP would be $2.63 trillion, not $3.73 trillion. This aligns closely with India's GDP estimate based on its budget.
In conclusion, India's real GDP is likely less than $3 trillion, ranking it number 8 in the world, just behind France's $3.1 trillion. Modi's goal of making India the world's third-largest economy seems to be an ambitious aspiration rather than a realistic expectation.
