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GROSS DOMESTIC
PRODUCT
GDP
- Pratik Ghone
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GDP DEFINITION :
The gross domestic product (GDP) or gross
domestic income (GDI) is a basic measure of acountry's overall economic output. It is the
market value of all final goods and services
made within the borders of a country in a
financial year.
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WHY IS GDP CALCULATED?
Calculating GDP is extremely important as the
performance of the economy is fixed by means
of this method. The results would help thecountry to forecast the economic progress,
determine the demand and supply, understand
the buying power of the people, the per capita
income, the position of the economy in the
global arena.
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GDP & STANDARD OF LIVING
GDP may be an indicator of standard of living
as it is measured frequently, widely and
consistently.
GDP is measured frequently in most countries
providing information on a quarterly basis,which allows a user to spot trends regularly
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GDP & STANDARD OF LIVING
. It is measured widely, therefore GDP is
available for almost every country in the world,
allowing comparisons to be made betweencountries.
GDP is often used as an indicator, on therationale that all citizens would benefit from
their country's increased economic production.
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GDP CAN BE CALCULATED
IN THREE WAYS:
1) Product (or output) approach
2) Income Approach
3) Expenditure Approach
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PRODUCT APPROACH
Usually in this approach the economy is brokendown into classes of enterprise: agriculture,construction, manufacturing, etc. Their outputs
are estimated largely on the basis of surveysregarding their Businesses.
Calculated as:
GDP = Gross Value added + Taxes on Products
- Subsidies on Products
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INCOME APPROACH
Another way of measuring GDP is to measuretotal income. If GDP is calculated this way it is
sometimes called Gross Domestic Income(GDI), or GDP(I)
Calculated as:
GDP = Compensation of Employees+ GrossOperating Surplus + Gross Mixed income +taxes - subsidies on production and imports
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EXPENDITURE APPROACH
Calculated as:
GDP = C + I + G + (X-M)
GDP = Consumption + Investment +
Government Spending + (exports-imports)
Indian Economy is measured through this
Approach
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INDIAN GDP
India Gross Domestic Product (GDP) expanded7.90% over the last 4 quarters.
The India Gross Domestic Product is worth 1217billion dollars or 1.96% of the world economy,according to the World Bank.
India's diverse economy encompasses traditionalvillage farming, modern agriculture, handicrafts,a wide range of modern industries, and amultitude of services.
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INDIAN GDP
Services in India are the major source ofeconomic growth, accounting for more thanhalf of India's output with less than one third of
its labor force.
The Indian economy has posted an average
growth rate of more than 7% in the decadesince 1997, reducing poverty by about 10percentage points.
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INDIAN GDP GROWTH RATE
GRAPH
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INDIAN GDP GROWTH RATE
TABLE
YEAR MAR JUNE SEPT DEC AVERAGE
2009 5.80 6.10 7.90 6.60
2008 8.60 7.80 7.70 5.80 7.48
2007 9.80 9.20 9.00 9.30 9.33
2006 10.30 9.70 10.20 9.40 9.90
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ECONOMIC SECTORS
CONTRIBUTING TO GDP IN
INDIA
Agriculture and allied sectors like Forestry,
Logging and Fishing accounted for1
6.6% of theGDP in 2007.
Industry and Services accounts for 54.6% ofthe GDP
Global Trade accounted 20% of the GDP.