Tanks to GDP: A Question of Progress Measurement in a Changing Economy

GDP Under Scrutiny: Zerodha CEO Nithin Kamath Questions the Measure of Progress

Nithin Kamath, co-founder and CEO of Zerodha, has sparked a discussion on social media by questioning the relevance of Gross Domestic Product (GDP) as a measure of progress. In a lengthy post on microblogging site X, Kamath highlighted the distinct difference between economic output and public welfare, emphasizing that GDP was developed by Simon Kuznets in 1934 to provide a clear picture of the state of the American economy.

The Origins of GDP

Kuznets developed the Gross National Product (GNP) to measure welfare, not raw output. "He wanted to measure welfare, how well people were actually doing," Kamath noted. However, the US government was focused on World War II and needed a production gauge, which is the role that GDP fulfilled. By 1942, GNP/GDP was that gauge, counting everything, including a dollar spent on a bomb and a dollar spent on a school lunch as the same dollar.

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GDP as a Scoreboard

Kamath further noted that Kuznets tried to reimagine GDP in 1962, calling for distinguishing between the quantity and quality of growth. The late economist emphasized that "Goals for more growth should specify more growth of what and for what." However, by then, it was too late, and GDP had become the scoreboard, and nobody was going to retire it.

Challenging GDP

Kamath linked his argument to United Nations Secretary-General António Guterres' statement in February 2026: "When we destroy a forest, we are creating GDP. When we overfish, we are creating GDP." He supported this argument with an example from economist Diane Coyle: "A widower marries his housekeeper. She does the same work she was doing before, in the same house, for the same person. But because he stops paying her a salary, GDP shrinks. She didn't stop working. The payment stopped."

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Rethinking GDP

Kamath added his own examples to the mix, stating, "A country strips its forests bare, and GDP goes up. Cancer clusters emerge, hospital bills pile up, and GDP goes up. Public transport falls apart, everyone has to buy a car, and GDP goes up. The metric rewards the disease and the cure equally." He ended the post noting that GDP "tells you real things" but is a remnant of an era that may soon be completely left behind as we enter the age of artificial intelligence.

Alternatives to GDP

The debate is not new. In January 2025, McKinsey & Co published a report titled "Global Growth: Can productivity save the day in an aging world?" and as part of the release, added a separate paper titled "Is GDP the best measure of growth?" The paper concluded that any future measure must pursue "smart growth rather than a focus on maximizing a single number." In December 2025, the UN World Summit for Social Development 2025's High-Level Expert Group on Beyond GDP shared their first analysis, proposing five important principles for a more balanced and integrated pursuit of sustainable development.

According to an Investopedia report, alternatives such as the Genuine Progress Indicator (GPI), which adds social and environmental factors, is gaining some popularity. Notably, a bill calling to establish GPI as an alternative economic measurement indicator was introduced in the US Congress in 2021. However, no further action has been taken.