GDP includes the final value of all goods and services. It is a benchmark tool which is used to gauge the direction and overall wealth of the economy. For example India is 6th largest economy but it is one of the poorest country more than 22% of the people are living in abject poverty. The problem with GDP are as follows:
- GDP does not account the leisure time and hence the quality of social life. It does not account the average hours put by an individual.
- GDP includes what is spent on environmental protection, healthcare, and education, but itdoes not include actual levels of environmental cleanliness, health, and learning.
- GDP includes production that is exchanged in the market, but it does not cover productionthat is not exchanged in the market. Eg Mother care work
- GDP has nothing to say about the level of inequality in society.
- GDP also has nothing in particular to say about the amount of variety available.
- GDP has nothing much to say about which technology and products are available.
- In certain cases, it is not clear that a rise in GDP is even a good thing.