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GDP is calculated by considering 3 different prices
Factor Cost: Cost of factors of Production such as land, Labour & Capital
Basic Price (Price expected to be received by Producer): Factor Cost +
Production Taxes- Production Subsidies
Market Price (Price expected to be paid by consumer): Basic Price+
Product Taxes- Product Subsidies.
GDP at Market price= GDP at Basic price + Product Taxes- Product
Subsidies
Or
GDP at Market Price= GDP at Factor Cost + Production Taxes+ Product
Taxes – (Production Subsidies + Product Subsidies)
Or
GDP at Market price = GDP at Factor Cost + Indirect Taxes – Subsidies
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Real GDP: Refers to GDP at base year prices i.e., GDP is calculated as per
market prices in the base year. Thus, the Real GDP negates the inflation in
goods and services.
In case of high rate of inflation, nominal GDP would be quite higher than
real GDP. However, in case of deflation, real GDP would be higher than
nominal GDP.
GDP VS GNP
GNP = GDP + Income earned by Indians outside India – Income earned by
Foreigners within India
GNP = GDP + Net Factor Income from abroad (NFIA).
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1979-80
Recession is defined as a fall in the overall economic activity for two consecutive
quarters (six months) accompanied by a decline in income, sales and employment.
In independent India’s history, 5 such years of negative GDP growth were registered.
They saw contraction of -1.2% (FY58), -3.66% (FY66), -0.32% (FY73), -5.2% (FY80)
and present financial year (2020-21).
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Public 3% 1% 1%
IMPORTANT OBSERVATIONS
Gross Domestic Savings is contributed by Household sector, Private
Corporate and Public Sector.
Decline in Gross Domestic Savings in the last decade from 37% to 31.5%.
Household Sector contributes for the largest share of Savings in India.
The Household Savings is categorized into:
a) Net Financial Savings
b)Physical Savings
Note: Physical Savings of household sector account for the larger share in
comparison to Net Financial Savings)
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Comparison using Nominal GDP: Countries globally measure their GDP size
in terms of their own currencies. This makes cross country comparison
difficult. Hence, to compare GDP size of countries, we need a common
currency. Hence, GDP size of countries are converted into dollars using
average exchange rates as shown below.
TOP 5 COUNTRIES IN TERMS OF NOMINAL GDP
Rank Country Size of GDP in Exchange Size of GDP in
terms of own Rate terms of Dollars
Currency (Approximate
(Approximate values)
values)
1. USA $21 trillion N/A $ 21 trillion
2. China 92 trillion Yuan $1 = 7 Yuan $ 13 trillion
3. Japan 553 trillion Yen $ 1 = 107 Yen $5 trillion
4. $ 1 = 0.90
Germany 3.5 trillion Euros $4 trillion
Euro
5. India 204 lakh crores $ 1= 70 Rs $2.9 trillion
COMPARISON USING PPP
TOP 5 COUNTRIES IN TERMS OF GDP PPP
Rank Country Size of GDP in Purchasing GDP Size in terms
terms of own Power of PPP (US$)
Currency Parity Rates (Approximate
(Approximate (As Published values)
values) by World
Bank in 2018)
1 China 92 trillion Yuan $ 1 = 4.23 Yuan $21.74 trillion
2 USA $ 21 trillion N/A $21 trillion
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CORNWALL CONSENSUS
A report released recently by the G7 Economic Resilience Panel has called for
a radically different relationship between the public and private sectors to
counter the problems caused due to Covid-19 and strengthen the resilience and
innovation of economies.
Main Points:
1. Against Washington Consensus which focused more on reduced role of
State and higher role of private sector. Instead, it calls for greater partnership
between Government and Private sector.
2. Accelerate reform of global economic governance to promote the
common good
3. Accelerate investment in the SDGs, promote digital inclusion, eliminate
tax evasion, and facilitate full access for developing countries to global
markets.
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noticeable progress.
All three states that were in the ‘Aspirant’ category (with score/s in the range of 0–49)—Uttar
Pradesh, Bihar and Assam—have graduated to the ‘Performer’ category (50–64). Thus,
presently, there are no states in the Aspirant category.
Top Performing States: Kerala, HP, Andhra Pradesh, Telangana and Tamil Nadu.
Bottom ranked States: Bihar, Jharkhand, Arunachal Pradesh, Meghalaya and UP.
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schemes- providing paediatric care, new-born emergency services, and successful vaccination
rely heavily on the availability of electricity at the health centres.
IMPORTANT INDEXES
LATEST REPORT
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INDIA’S RANK
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life, being knowledgeable and have a Thus, it is more of a potential or future level of
decent standard of living. Human Development expected from investment
Thus, it measures the present level of in Education and Health.
Human Development
3 Parameters: 3 Parameters:
Life Expectancy Index: Measured by Survival-: Measured by under 5 mortality.
Life Expectancy at birth Expected years of Quality-adjusted school:
Education Index: Measured by Expected Measured by both Quantity and Quality of
Years of Schooling and Mean Years of Education
Schooling Health environment: Measured by Adult
Standard of Living: Measured by Per Survival Rate and Rate of stunting of Children
Capita Income under the age 5
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It is a tool assessing a nation’s ability to look after its wealth in a way that is
sustainable and safeguards its future generations.
While GDP measures the size of a country’s economy, inclusive wealth index
focuses on stocks of manufactured, human and natural capital.
Provides important insights into long-term economic growth and human well-
being.
The Index measures the wealth of nations through a comprehensive analysis of
a country’s productive base and the country’s wealth in terms of progress, well-
being and long-term sustainability.
INDICATORS
A countries’ natural, manufactured, human and social capital.
DAMOCLES INDEX
PREPARED BY
Nomura
WHAT DOES IT MEASURE
The Damocles index summarises macroeconomic and financial variables into a
single measure to assess an economy’s vulnerability to a currency crisis.
INDICATORS
It is based on eight key indicators which help strike a balance between false
signals and real crisis signals to assess the risk of an exchange rate crisis up to
12 months in advance.
A score above 100 suggests a country is vulnerable to an exchange rate crisis
in the next 12 months, while a reading above 150 signals that a crisis could
erupt at any time.
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LIVEABILITY INDEX
PREPARED BY
Ministry of Housing and Urban Affairs
WHAT DOES IT MEASURE?
Liveability index is tool that aims to measure quality of life in 99 smart cities,
capital cities and those with a population of over one million. It will be funded by
World Bank.
INDICATORS
It will assess cities on comprehensive set of 79 parameters. These parameters
include local governance, education, employment, social infrastructure, health,
safety, physical infrastructure such as housing, availability of open spaces,
security, land use, energy, availability of water, solid waste management etc.
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PREPARED BY
The index is published by the United Nations International
Telecommunication Union based on internationally agreed information and
communication technologies (ICT) indicators.
WHAT DOES IT MEASURE?
It is a valuable tool for benchmarking the most important indicators for
measuring the information society. This can also be used to measure digital
divide.
INDICATORS
It uses 11 indicators classified into three heads of:
ICT Access (0.40 weightage)
ICT Usage (0.40 weightage)
ICT Skills (0.20 weightag
TRENDS
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