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# GDP..

OBJECTIVE

The advance GDP estimates are released before the end of a financial year to enable the government to formulate various estimates for inclusion in the Budget.

From Wikipedia. referred to as the annual Financial Statement[1] in Article 112 of the Constitution of India. The budget has to be passed by the House before it can come into effect on April 1. the most by any. Former Finance Minister Morarji Desai presented the budget eight times.[2]  The . is the annual budget of the Republic of India. the start of India's financial year. presented each year on the last working day of February by the Finance Minister of India in Parliament. the free encyclopedia  Union budget of India Union Budget of India.

[5] Example: the expenditure method: GDP = private consumption + gross investment + government spending + (exports − imports). The income approach works on the principle that the incomes of the productive factors ("producers. give the same result. all of which should. They are the product (or output) approach. and determines GDP by finding the sum of all producers' incomes. therefore the value of the total product must be equal to people's total expenditures in buying things.DETERMINING GDP  GDP can be be determined in three ways. The expenditure approach works on the principle that all of the product must be bought by somebody. and the expenditure approach. or    . the income approach. The most direct of the three is the product approach." colloquially) must be equal to the value of their product. in principle. which sums the outputs of every class of enterprise to arrive at the total.

e. . 3. . This method consists of three stages:-Estimating the Gross Value of domestic Output in various economic activities. Value of Output = Value of the total sales of goods and services + Value of changes in the inventories. i. Gross Value Added = Value of output – Value of Intermediate Consumption.PRODUCTION APPROACH  CALCULATE " Market value of all final goods and services calculated during 1 year . " The production approach is also called as Net Product or Value added method. Determining the intermediate consumption. Symbolically. . The sum of Gross Value Added in various economic activities is known as GDP at factor cost. 2. GDP at factor cost plus indirect taxes less subsidies on products is GDP at Producer Price.  1.. . supplies and services used to produce final goods or services. and finally Deducting intermediate consumption from Gross Value to obtain the Net Value of Domestic Output. the cost of material. . .

e. 2. Subtracting each sector's intermediate consumption from gross output. the gross output of each sector is calculated by any of the following two methods:-By multiplying the output of each sector by their respective market price and adding them together and By collecting data on gross sales and inventories from the records of companies and adding them together. . economic activities (i. After classifying economic activities. we get GDP at Producer Prices. We. we get sectoral Gross Value Added (GVA) at factor cost. For measuring gross output of domestic product. Adding indirect tax less subsidies in GDP at factor cost.Production approach   1. then add gross value of all sectors to get GDP at factor cost. 1. industries) are classified into various sectors.

against 8. CSO's GDP growth projection is a tad lower than the 7% forecast made by the Reserve Bank of India in its quarterly monetary policy review last month.4% expansion in the last fiscal.9% in FY12. agriculture and mining sectors. mainly due to sharp slowdown in manufacturing.GDP Highlights  The economic growth is likely to fall to a three-year low of 6. The .

according to the Advanced Estimates released today by the Central Statistical Organisation (CSO).AGRICULTURE SECTOR Agriculture and allied activities are likely to grow at 2. compared to a robust growth of 7% in FY11. .5% in FY12.

MANUFACTURING Manufacturing growth is also expected to drop down to 3.6% last year.9% in this fiscal from 7. .

latest GDP growth estimate of 6.3%.5%. 2011.  The .More on GDP Estimates…  In its mid-year Economic Review. The current estimate is a sharply lower than the 9% growth projection for FY12 made by the government in its pre-Budget survey in February last year. given that GDP growth in the April-September. the government had also pegged growth at around 7. period stood at 7.9% for the entire fiscal means that the pace of economic expansion slowed in the second half of FY12.

mining and quarrying is likely to witness a decline of 2.2%. compared to a growth of 5% a year ago.Mining & Quarry According to the advance estimates. .

REAL ESTATE & BFSI Growth in construction is also likely to slip to 4. insurance. real estate and business services sectors are likely to grow by 9. against an 8% in FY11. Furthermore.8% in FY12. against 10.1% this fiscal.  .4% last fiscal. the finance.

ENERGY & POWER According to the data. likely to be better this year.3% in FY12. however. The segments are expected to grow up by 8. . growth in electricity. against 3% in FY11. gas and water production is.

1% last fiscal. compared to 4.5% in the year-ago period.2%.9%. transport and communication sectors are projected to grow by 11. hotel. TRADE & TRANSPORT During the current fiscal. against 11. the trade. Community . social and personal services are pegged to witness a growth of 5.HOTEL.

7%.  The .4% in both FY11 and FY10. However.Concluding GDP Estimate  The government and the RBI had earlier said that global economic slowdown and the high domestic interest rate regime is likely to act as a dampener in this fiscal's growth. while growth in FY09 was 6. the 6. Indian economy had expanded by 8.9% growth projected in the advanced estimates is lower than what experts have been forecasting.

Nominal GDP. For example. In order to abstract from changes in the overall price level. if 1990 were chosen as the base year. and deflation is defined as a fall in the overall price level. another measure of GDP called real GDP is often used. Therefore.  Real GDP is GDP evaluated at the market prices of some base year. Real GDP. then real GDP for 1995 is calculated by taking the quantities of all goods and services purchased in 1995 and multiplying them by their 1990 prices. and Price Level  Nominal GDP is GDP evaluated at current market prices. Inflation is defined as a rise in the overall price level. nominal GDP will include all of the changes in market prices that have occurred during the current year due to inflation or deflation. .

one can calculate an implicit index of the price level for the year. Note that in the base year. . Using the statistics on real GDP and nominal GDP.  The GDP deflator can be viewed as a conversion factor that transforms real GDP into nominal GDP. This index is called the GDP deflator and is given by the formula. real GDP is by definition equal to nominal GDP so that the GDP deflator in the base year is always equal to 100.GDP DEFLATOR  GDP deflator.

The percentage change in the GDP deflator from the previous (base) year is obtained using the same formula used to calculate the growth rate of GDP. Suppose Calculating the rate that in the year following the base year. of inflation or deflation. the GDP deflator is equal to 110. Another way of describing this finding would be to say that the inflation rate in the year following the base year was 10%. This percentage change is found to be  implying that the GDP deflator index has increased 10%. . Rate of inflation or deflation.

CONSUMER PRICE INDEX  The GDP deflator is not the only index measure of the price level. The formula for the CPI is given as . the consumer price index (CPI) is the most frequently cited. the CPI uses base year quantities rather than current year quantities in calculating the price level index value. First. the CPI measures only the change in the prices of a “basket” of goods consumed by a typical household. Second. Among the many other price indices. The CPI differs from the GDP deflator in two important ways.

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