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What is GDP?
The Gross Domestic Product (GDP), is the total value of a nation�s goods and services produced within a particular period of time, usually on a calendar year basis. More precisely, GDP can be calculated by adding up the following components: Consumption, Investment, Government spending, and Net exports (The spread between imports and exports).
Formula for calculating GDP -
GDP = C + I + G + (X-M)
Where,
- C stands for consumption which includes personal expenditures pertaining to food, households, medical expenses, rent, etc
- I stands for business investment as capital which includes construction of a new mine, purchase of machinery and equipment for a factory, purchase of software, expenditure on new houses, buying goods and services but investments on financial products is not included as it falls under savings
- G stands for the total government expenditures on final goods and services which includes investment expenditure by the government, purchase of weapons for the military, and salaries of public servants
- X stands for gross exports which includes all goods and services produced for overseas consumption
- M stands for gross imports which includes any goods or services imported for consumption and it should be deducted to prevent from calculating foreign supply as domestic supply
Reasons for GDP growth in India:
- Indian GDP growth is contributed by a large no. of sectors such as agriculture, textile, manufacturing, information technology, telecommunication, petroleum, etc so it is well diversified and not dependent on any particular sector�s growth.
- With the introduction of the digital era, Indian economy has huge scope in the future to become one of the leading economies in the world.
- India has become one of the most favored destinations for outsourcing activities.
- India at present is one of the biggest exporter of highly skilled labor to different countries
- The new sectors such as pharmaceuticals, nanotechnology, biotechnology, telecommunication, aviation, manufacturing, shipbuilding, and tourism are expected to grow at a very high rate.
Facts about Indian GDP:
- The Indian economy is the 12th largest in the world.
- The GDP of India in the year 2007 was US $1.09 trillion. (INR / USD at 40.76).
- It ranks 5th pertaining to purchasing power parity (PPP) according to the latest calculation of the World Bank.
- Due to the huge population the per capita income in India is $964 at nominal and $4,182 at PPP.
- India is one of the fastest growing economies in the world.
Source: Business maps of India
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