Did the Indian GDP just jump up by a basis point?

Google made two important announcements:

• The database underlying google maps is now of the quality required to support turn-by-turn navigation. Every smart phone or tablet that can use google maps just became a GPS device that is capable of giving you turn-by-turn navigation including giving you instructions in audio.


• In six cities, they now have realtime traffic data available as an overlay on google maps. You can look at the map and it will show you what segments of what roads are congested.

This will, I assume, enable cool things within applications like Google Now to work: it knows your calendar, it analyses traffic conditions, and tells you at the right time "Now it's time for you to leave". Similarly, we can now use Google Places ("search for a coffee shop close to where I am right now"). It shows you the list of what's available, you touch one of them, and it's now ready to give you turn-by-turn directions to go there.

Industry sources say there are roughly 26 million smart phones out there that are able to use google maps. In other words, we have just had 26 million satnav devices added to the Indian capital stock. And, we've added realtime traffic data for the subset of these that are in 6 cities. Millions of people have just had a jump in productivity.



An interesting Fermi problem : Will this add one basis point to GDP? At first, I thought this was hard because it'd require making assumptions about how much time each satnav saves for the person, that person's output per minute, and so on. But a reverse calculation is illuminating: 1 basis point of GDP is Rs.1000 crore or Rs.10 billion. Divide by 26 million smart phones and you get : a flow of increased output of Rs.384 per satnav per year. In other words, if each satnav device adds Rs.384 of output to the owner's life per year, then Google's turn-by-turn navigation added 1 bps to GDP. And I'm not even counting the impact of realtime traffic data. This number (Rs.384 per satnav per year on average) seems plausible to me.



You may like to see this material on map databases in India.