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

Zerodha co-founder and CEO Nithin Kamath has sparked a discussion on social media by questioning if gross domestic product i.e. GDP is the right measure of progress. In a lengthy post on microblogging site X (formerly Twitter), the trading platform executive noted the distinct difference between economic output and public welfare.

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

‘Kuznets wanted to measure welfare’

The executive further noted that when Kuznets developed his metrics, he was not trying to measure raw output. “He wanted to measure welfare, how well people were actually doing. He was explicit about this. Armaments, advertising, the inflated cost of urban housing that people pay just to be close enough to earn a living, he wanted all of that excluded,” Kamath added.

However, the US government was focused on World War II and needed a production gauge, which is the role that GDP fulfilled, the Zerodha founder added. “How many tanks, how many planes, how much steel? By 1942, GNP/GDP was that gauge. Everything counted. A dollar spent on a bomb and a dollar spent on a school lunch were the same dollar,” the founder added.

‘GDP became scoreboard’

Kamath further noted that Kuznets tried to reimagine GDP again in 1962 calling for keeping in mind that distinctions between quantity and quality of growth. The late economist added that “Goals for more growth should specify more growth of what and for what.”

“By then, it was too late. GDP had become the scoreboard, and nobody was going to retire it,” Kamath added.

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

Kamath further linked his argument to United Nations Secretary-General António Guterres' interview with The Guardian in February 2026, where he stated: “When we destroy a forest, we are creating GDP. When we overfish, we are creating GDP.”

He supported Guterres' argument with another 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.”

“Or if you grow your own vegetables instead of buying them at the store, GDP falls. Cook dinner instead of ordering in, and GDP falls. The work is identical, but it just stops being counted,” Kamath noted from Coyle's examples.

GDP ‘rewards the disease and the cure equally’

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.

“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 AI, and that's still the gauge we're using,” he ended.

Is there an alternative to GDP as measure of economic growth?

The debate is not new. In January 2025 — full 11 years earlier — 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 sought to mull this same question, noting that “GDP alone is an imperfect metric for growth and prosperity”. It 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, noting “the urgent need for measures of progress that enable more balanced and integrated pursuit of sustainable development”.

To do so, it proposed five important principles:

• Countries need to look at more than GDP to gauge material well-being more accurately.
• It takes more than income to capture all aspects of well-being.
• When addressing inequality and exclusion it’s necessary to look beyond average figures.

• The need to think in the long term, to ensure economic, environmental, social and institutional sustainability for future generations.
• Well-being is interconnected across countries in today’s world. This makes cooperation all the more crucial, in setting global norms of measurement, unlimited to specific countries or regions.

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. It had called for federal agencies to make combined use of GPI and GDP data when assessing the economy and growth. However, no further action has been taken, it added.