The purpose of this post is to show that the boisterous claims of India’s historical GDP being the highest in the world are derived using extremely flawed methodology and dubious data.
Some basic knowledge of economics is required to completely understand the post. I would appreciate if you read the additional reading and the sources I have cited before posting evaluative comments.
“India’s economy was one of the largest in the world before the British robbed her of her wealth” is one of the most common claims made by users from all ends of the intelligence spectrum here on Quora. The claim has shot up since the Economist published this chart using data from Angus Maddison’s papers. Because for once the qualitative claim made taught to generations of Indian and Chinese was quantified, everyone harped on to share this picture without for once thinking about the dubious research that underlies it.
Angus Maddison’s estimates according to Angus Maddison himself are ‘mere conjecture’. Most peer reviewed evaluation of Angus Maddison’s study have dubbed them ‘nothing more than an educated guess’ or at best ‘far fetched speculation’. 
Dubious Assumptions in GDP estimation
Angus Maddison assumes that for a large part of their histories, growth of individual countries was stagnant which was followed by a slump or a rise in growth. The inflexion point where transition to modern growth happened differs for different countries. It is 1700 AD for China and 1800 AD for India. He then uses several assumptions to come up with GDP estimates. The three most prominent ones are,
- Assumption 1: Everyone in India pre-1800 AD was involved in . This assumption applies to Maddison’s estimates of the GDP of all countries.
- Assumption 2: The per capita income of the entire world was the almost similar. For most countries, this was $400 in 1990 dollar terms. This arbitrary estimate of subsistence income is described by
Though much is obscure about how Maddison’s estimates were created, a crucial assumption is that the basic subsistence GDP per capita of all societies is $400 (1990 international prices). This is the fundamental constant in Maddison’s world. Any primitive enough society is assigned this minimum
Maddison asserts that there were very minuscule differences in the subsistence level of different countries, thus of the 27 quotes of GDP for different countries, 26 lie in the range of $400 to $450.
- Assumption 3: Non agricultural variables had no or minimal impact on GDP. I need not explain that the most important variable missed here is international trade as services were non-existent. 
The methodology for GDP calculation is simple. After determining the per-capita income of the world at that time which was almost the same because everyone was a subsistence farmer, multiply it with an estimate of the world population.* This skews his estimates towards India and China because of their large population.
The curious case of India
Let’s begin with Angus Maddison’s famous results of world GDP per capita,
Source: Maddison, Angus. Contours of the world economy 1-2030 AD: Essays in macro-economic history. Oxford University Press, 2007.
From 1 AD to 1000 AD, all the economies of the world were poor as they all lived in subsistence or near subsistence levels. India was no exception. India’s per capita GDP was the same as most other regions of the world. There is no evidence to say that the standard of living in India was better than any other region of the world. We begin to see societies with disposable income only near 1700’s when modern Industrial era begins.
Maddison estimated that India at that time had about 34 percent of the world’s population and since everybody was dirt poor subsistence farmer with near similar per capita income, India has 32 percent of the world GDP. See chart below
The GDP figure being thrown everywhere by exuberant Indians all over the web is high because of India’s enormous population of farmers, not because India’s civilization was advanced or better developed. **
If you have cited these GDP estimates of late, you have implicitly conceded that India was always dirt poor but it’s not an issue because the world was dirt poor till the 1500’s.
The case of Italy
According to chart A.7, Italy’s per capita income double that of India. Angus Maddison’s figures GDP figures are for regions that are a cohesive entity now whereas the majority of the population of the Roman Empire resided in Egypt and eastern Europe which are not a part of present day Italy. If such dominions of Roman Empire which are not in Italy are included in calculation now, Italy’s historical GDP should have been more that that of India and China.
Further data snooping
Maddison’s data has been the subject if immense data snooping*** over the years His data is always presented a way to suit or naturally lead to a desired result.The best example of this data snooping is the plot from the Economist.
Source: The Economist
This plot prepared by the Economist using Angus Maddison’s already flawed data also used PPP**** comparisons to compare global share of India and China over time. The Economist does not sufficiently explains how they came up with the ‘model consumption baskets’ to compare consumption over time. *****
This further adds to the inaccuracy of Dr. Maddison’s estimates.
But hey, this figure soothes nationalist ambitions and is hence irrefutable despite tons of economic evidence otherwise.
Angus Maddison was indeed a great economic historian. All his data is valid if studied in context with due emphasis to the subtle assumption Maddison’ adopted to come up with it. His figures taken out of context are used extensively on social media by anyone who wants to justify the existence of a glorious past that India arguable did not have. All countries of that time were poor and underdeveloped, India was no exception. India’s stolen GDP never existed in the first place.
I am fairly surprised to see boisterous claims misused primarily with people with limited knowledge of economic analysis to further their phony claims. “Quantification can create the illusion of precision” but that does not render a claim correct.
Angus Maddison was a great economist. His data though controversial brought about a revolution in economist. It is saddening to see the same data as the quantification of a fairy tale Indians have been taught in schools. Honestly, it is not.
 Datta, Saugato, ed. Economics: making sense of the Modern Economy. John Wiley & Sons, 2011.
 Maddison, Angus. Contours of the world economy 1-2030 AD: Essays in macro-economic history. Oxford University Press, 2007.
3. Clark, Gregory. “A farewell to alms.” (2007).
Excellent critique of Maddison’s Chinese data.
One of the many peer reviewed criticisms of Maddison’s methodology.
A tribute to Angus Maddison for his contributions to economics.
** The estimate of India’s population is also flawed. There are several competing estimates, Maddison just adopted the largest estimate as the most authoritative one and built up on it. There is a lot of evidence to claim that India’s population was less than that of China at that time.
*** Using statistical methods to find relationships between variables.
**** For an overview of the controversy regarding PPP, refer to Taylor and Taylor (2004)