GDP - ECONOMY

GDP - ECONOMY

News: India’s real GDP growth for 2023-24 estimated at 7.3%

What's in the news?

●       India’s real GDP growth in 2023-24 is estimated at 7.3%, compared to 7.2% a year ago, as per the first advance estimates of national income released by the National Statistical Office (NSO).

 

Key takeaways:

●       The NSO’s economic growth estimates are higher than the 7% growth for the year recently projected by the Reserve Bank of India.

 

GDP:

●       Gross Domestic Product measures the total value of all final goods and services produced within a country's borders over a specified time period.

●       GDP is often referred to as an indicator of a country's economic performance and overall health.

 

GDP in India:

●       Base year - 2011-12

●       Estimated by Central Statistics Office (CSO).

●       Now CSO values industry-wise estimates as gross value added (GVA) at basic prices.

 

Data sources:

·         For the calculation of GDP at factor cost, data is taken from eight sectors, namely agriculture; mining and quarrying; manufacturing; forestry and fishing; electricity and gas supply; construction, trade, hotel, transport and communication; financing, real estate and insurance; and business services and community, social and public services.

·         For the calculation of expenditure-based GDP, all the spending incurred on final goods and services are added that include consumer spending, government spending, business investment spending, and net exports.

·         The government releases quarterly GDP numbers every two months, and the final numbers for the whole year are issued on May 31.

 

Components:

The GDP growth rate is driven by GDP’s four components.

  1. The main driver is personal consumption, which includes the critical sector of retail sales.
  2. The second component is business investment, including construction and inventory levels.
  3. The third is government spending whose largest categories are social security benefits, defence spending and medicare benefits. The government often increases spending to jump-start the economy during a recession.
  4. The fourth is net trade to the world.

 

Methods:

  1. Output method:

●       This measures the monetary or market value of all the goods and services produced within the borders of the country

●       To avoid a distorted measure of GDP due to price level changes, GDP at constant prices or real GDP is computed.

  1. Expenditure method:

●       This measures the total expenditure incurred by all entities on goods and services within the domestic boundaries of a country.

  1. Income method:

●       It measures the total income earned by the factors of production, that is, labour and capital within the domestic boundaries of a country.