The purchasing power parity (PPP) is the amount of currency units required to purchase a basket of goods and services that can be purchased with one unit of the reference economy’s currency.
“There has been a lot in the newspapers about our being the fourth largest economy. Those are all measured at market prices, but the real way of measuring productivity is purchasing power parity.
“And while we are USD 4 trillion GDP at market prices, at PPP term, we are USD 15 trillion economy,”Bery said while addressing the Annual Business Summit 2025 of the Confederation of Indian Industry (CII).
He said that economists tend to measure labour productivity at purchasing power parity as PPP measures the real size of the economy of countries against the size of the US economy.
“And so while we (the size of India economy in PPP term) are at at USD 15 trillion, the United States is at USD 29 trillion. “So we are roughly half the world size of the US economy,” he said. Bery said India needs to diversify its sources of supply, so the country would not have to depend on a particular supplier.
He also suggested that India should leverage global knowledge and innovate locally, while reforming markets and building skills.
The NITI Aayog vice chairman also emphasised that the states should utilise opportunities of Free Trade Agreements (FTAs) which were signed by the Union government.
He said competitiveness should not only be restricted to manufacturing but should extend to services as well.
Bery said India’s labour productivity is the lowest among the G20 nations and a sustained rise in productivity of labour is crucial for India to leverage its demographic dividend.
“India’s track record has not been bad in terms of growth productivity, but it needs to get better.
“Our problem is our low level of labour productivity, not only with respect to the US but also with respect to some of our peers, such as China and other peers in ASEAN,” he said.
Noting that rising labour productivity leads to faster growth in real incomes, Bery said the fact that that has not been happening as fast as people’s aspirations, is what is leading to the skewing for government jobs.
Bery pointed out that India has maintained an average growth rate of 6.5 per cent for the 30 years since 1991 reforms to the COVID period in 2021, suggesting that the roots of resilience in India are as much in our institutions as they are in our policies.
“Deep institutional sources of resilience are in place, but we mustn’t be complacent, because we need to up our game for all kinds of reasons,” he said.
According to Bery, industrialisation is another challenge facing the country and policy lessons could be drawn from countries such as China, Japan and South Korea even though each country must work out its own path and productivity trajectory. PTI
