‘Built in the 1940s to count tanks’: Nithin Kamath questions if GDP is right measure of progress

Nithin Kamath, co-founder and CEO of Zerodha, sparked a debate on social media by questioning whether gross domestic product, or GDP, is the correct measure of progress. In a lengthy post on microblogging site X (formerly Twitter), the trading platform executive noted the stark difference between economic output and public welfare.

Noting that GDP was developed by Simon Kuznets when the economist was tasked with finding out the state of the American economy in 1934 and developing what was then called GNP (gross national product), Kamath said his aim at the time was to provide a clear picture of how bad things really were.

‘Kuznets wanted to measure welfare’

The executive also noted that Kuznets did not attempt to measure raw output when developing its metrics. “He wanted to measure well-being, how well off people actually were. He was open about that. Armament, advertising, the inflated cost of urban housing that people paid just to be close enough to make ends meet, he wanted all of that to be excluded,” Kamath added.

But the founder of Zerodha added that the US government was focused on World War II and needed an indicator of production, the role that GDP fulfills. “How many tanks, how many planes, how much steel? By 1942, this indicator was GNP/GDP. Everything was important. A dollar spent on bombs and a dollar spent on school lunches were the same dollar,” the founder added.

‘GDP has become a scoreboard’

Kamath also noted that Kuznets tried to redesign GDP in 1962 and called for the distinctions between quantity and quality of growth to be kept in mind. The late economist added: “Targets for further growth should specify what and for what further growth.”

“By then it was too late. GDP had become the scoreboard and no one could retire it,” Kamath added.

‘Destroying a forest creates GDP’: UN SG António Guterres

Kamath also linked his claim to an interview United Nations Secretary-General António Guterres gave to The Guardian in February 2026: “When we destroy a forest, we create GDP. When we overfish, we create GDP.”

He supported Guterres’ argument with another example from economist Diane Coyle. “A widower marries his maid. She does the same job she did before, in the same house, for the same person. However, since he stops paying her a salary, GDP shrinks. The woman did not stop working. Payments were stopped.”

“Or if you grow your own vegetables instead of buying them at the store, GDP goes down. Cook dinner instead of ordering it and GDP goes down. The work is the same but it doesn’t count anymore,” Kamath said of Coyle’s examples.

GDP ‘rewards disease and treatment equally’

Adding his own examples to the mix, Kamath said: “A country bares its forests and GDP rises. Cancer clusters appear, hospital bills pile up and GDP rises. Public transport collapses, everyone has to buy cars and GDP rises. This metric rewards disease and cure equally.”

He concluded his post by stating that GDP “tells you real things” but is a relic of an era that may soon be left behind entirely as we enter the age of artificial intelligence.

“GDP tells you real things about production and employment. But it was built in the 1940s to count tanks. We’re now facing one of the biggest economic shifts in history, thanks to artificial intelligence, and it’s still the unit of measurement we use.”

Are there any alternatives to GDP as a measure of economic growth?

The debate is not new. In January 2025 (exactly 11 years ago) McKinsey & Co.Global Growth: Can Do productivity Saving the day in an aging world?‘ and a separate article titled ‘ was added as part of the publicationIs GDP the best measure of growth?‘

The article attempted to address the same question, stating that “GDP alone is an imperfect measure of growth and prosperity.” He concluded that any future measures should aim for “smart growth rather than focusing on maximizing a single figure”.

In December 2025, the High-Level Expert Group on Beyond GDP of the UN World Social Development Summit 2025 shared its first analysis, noting the “urgent need for progress measures that enable sustainable development to be pursued in a more balanced and integrated way.”

To do this, he proposed five important principles:

• Countries need to look at more than GDP to more accurately measure material well-being.
• Capturing all aspects of well-being requires more than income.
• When addressing inequality and exclusion, it is necessary to look beyond average figures.

• The need for long-term thinking to ensure economic, environmental, social and corporate sustainability for future generations.
• In today’s world, prosperity is interconnected across countries. This makes collaboration even more important in setting global measurement norms that are not limited to specific countries or regions.

Alternatives such as the Genuine Progress Indicator (GPI), which adds social and environmental factors, are gaining some popularity, according to an Investopedia report. In particular, a bill was introduced in the US Congress in 2021 calling for the designation of GPI as an alternative economic measurement indicator. The bill called on federal agencies to use GPI and GDP data together when assessing the economy and growth. However, he added that no other precautions were taken.