India is currently the 4th largest economy in the world by GDP, while Singapore sits much lower at 27th. On the surface, this might suggest that India is far richer, given the size of its economy. But does a bigger GDP automatically mean greater wealth for its people, or does it only tell part of the story?
Before you answer or jump to conclusions, let us understand this through an example. There are times the thermometer shows a high reading, yet we still feel cold. That’s because other factors like wind or humidity also affect how we actually feel. The same logic applies to GDP rankings.
A country with a high GDP may appear wealthier at first glance, just as a thermometer showing a high reading suggests warmth. However, GDP alone does not capture the full picture of prosperity. Factors such as population size, per capita income, cost of living, and quality of life also play a crucial role in determining how “rich” a nation truly is.
Is India richer than Singapore?
Now, back to Akshat Shrivastava’s LinkedIn post. “India is ranked 4th on GDP. But, Singapore is ranked 27th,” wrote the Chief Operating Officer of Wisdom Hatch on LinkedIn, before asking, “So, is India richer than Singapore?”
He then shared a “quick backstory”. “By 2047, we will be a 40 trillion dollar economy. And, by this point, we will be a developed economy. This is a matter of great celebration. No doubt. And, we should be proud,” he added.
Shrivastava pointed out that although India’s overall GDP is growing, the reality for the “average” Indian remains starkly different. “If you look around, you will find that India ranks around 140th on GDP/Capita. No one seems to even talk about this number (like ever!). This means that while India is growing GDP-wise, an ‘average’ Indian is still quite poor.”
He explained the reasons behind this:
1- India imports more than it exports. This means that the GDP comes from domestic consumption and not from exports. “For decades, we have run, trade deficit, not a trade surplus.”
2- Next, he said that Singapore, despite its GDP being lower than India is in trade surplus. He cited data from 2021, where the nation had a trade surplus of 126Bn$, which is almost 32% of its GDP.
3- He also underscored that all three countries, which rank before India in terms of GDP, are mostly in trade surplus. Japan, Germany, and China are ahead of India when it comes to GDP.
Shrivastava said that although the US runs on trade deficit, just like India, it holds a reserve currency. “They can print their fake money and buy real goods from the world to the extent they want. And, still not cause a panic.”
He went on to say that India may or may not be richer than Singapore, but said that by logic, any country cannot “truly” become rich if it is running a trade deficit.
“Even if we look at history, this holds true. For 1700 years, India controlled 25-33% of the world’s wealth. Even during this phase, India was a net exporter of finished goods,” he further noted.
Reacting to his post, which has clocked over 1,700 reactions on LinkedIn, one user said, “The insights you’ve shared are thought-provoking, Akshat. It’s fascinating to consider how GDP alone doesn’t tell the full story of prosperity. What potential shifts in policy do you think could help elevate India’s GDP per capita in the coming years?”
“Higher GDP doesn’t always mean richer citizens…look at median income and purchasing power for a clearer picture. Export-driven growth is usually more sustainable long term…,” another said.
A third claimed, “I stay in Singapore and I can say, Singapore has a better lifestyle compared to India.” This could be because Singapore’s GDP per capita is much higher than India’s.
“Harsh reality is no one speaks about per capita GDP, which is the real metric. The rich get richer and the poor are still poorer,” commented a fourth.