Indian GDP- Thinking beyond.

The Challengers Group members

Soniya Dhiman Gopalji Yadav Munendra Sharma Ramkishore Mishra Ujjal Das Pankaj Tanwar Ajay Rana

About GDP
The Gross Domestic Product or GDP is a measure of all of the services and goods produced in a country over a specific period, classically a year. GDP =Y = C + I + G + (X M) C (consumption) is normally the largest GDP component, consisting of private household expenditures in the economy. I (investment) includes business investment in plant, equipment, inventory, and structures, and does not include exchanges of existing assets. G (government spending) is the sum of government expenditures on final goods and services. It includes salaries of public servants, purchase of weapons for the military, and any investment expenditure by a government. X (exports) represents gross exports. M (imports) represents gross imports.

Formula of GDP

India GDP growth rate in 2009

According to International Monetary Fund (IMF) economic growth rate of India is predicted to dip by 6.9 per cent in the fiscal year 2009. IMF has further stated that this relegation is unavoidable because the Asian nations are not fully impervious to the global financial crisis and its consequent negative effects. IMF's World Economic Outlook (WEO), released in Washington on October 8, 2008, explains the slopping of GDP growth rate in the last three years. In 2007 GDP growth rate was 9.3 per cent while in 2008 it dipped to 7.8 per cent and would end up at 6.9 per cent in 2009.

GDP by sector (2009 Estimate):

Agriculture: 17.2% Industry: 29.1% Services: 53.7%
Agriculture
Industry Services

Sectors that drives the GDP

Information Technology Information Technology Enabled Services Telecommunications Electronics and hardware Automobiles Pharmaceuticals and biotechnology Consumer durables Retail

Cont
Textiles Infrastructure Construction Airlines Hospitality Power Oil and natural gas Fertilizers and chemical

Growth Expected in India

2010
GDP USD 350 billion GDP growth rate 9%

2008
GDP USD 200 billion GDP growth rate 9.5%

Services contribution 60-65 % FDI limit is expected to be 100 percent in major industry sectors such as Telecom, Semiconductors, Automobiles, etc. Balance of Trade Should be positive with increased level of exports as compared with imports Investment goal USD 370 billion

2006
GDP USD 150 billion GDP growth rate 9 % Services contribution 54 % FDI limit not 100 percent in major industry sectors such as Telecom, Semiconductors, Automobiles, etc. Balance of Trade USD (-)46.2 billion Investment goal USD 250 billion

Services contribution 60 % FDI limit is expected to be close to 100 percent in major industry sectors such as Telecom, Semiconductors, Automobiles, etc. Balance of Trade Should increase with surging exports as compared with imports Investment goal USD 305 billion

Factors affecting GDP

Industrial Production Productivity Employment and Unemployment Prices Stock Market

How to increase the GDP

1. Making Growth More Inclusive - Small and medium enterprises (SME)
- Agricultural and rural development - Informal Sector Jobs - Lagging States

2. Improving Infrastructure
- Infrastructure - Power - Transport - Urban Development

Cont
3. Addressing Issues for Longer-Term Sustainability
- Adapting to climate change and the growing scarcity of water Improving energy efficiency and ensuring adequate energy supplies. Coping with accelerating urbanization through strengthened urban governance Protecting Indias fragile environment in the face of the rising pressures created by economic success.

4. Improving the effectiveness of public services and social protection, especially to the poor
- Education - Skills - Health - Safety Nets

Limitations of Indian GDP

Wealth distribution Quality of goods Externalities Sustainability of growth Non-market transactions Does not count black markets.

Recommendations
Creating more employment opportunities Foreign direct investment Investment by the government Improving export Monetary policy of RBI Reliability of data

Conclusion
India is considered as one of the best players in the world economy in the past few decades, but rapidly increasing inflation and the intricacies in administering the worlds biggest democracy are acting as the major hurdle in the field of development. Expansion is assisted by markets restructuring, huge infusions of FDI, increasing foreign exchange reserves, boom in both IT and real estate sectors, and a thriving capital market.