Session 4

Economic Indicators
GDP
• The total finished goods and services produced within a country’s
borders in a specific time period measured in terms of money.
• Nominal GDP – calculated at current price (impacted by inflation)
• Real GDP – calculated at constant price in term of base year prices
(not impacted by inflation)
• GDP Growth Rate – a tool to measure level of economic activities
• Drawback of GDP – black money not accounted for
Where do we stand Globally – Nominal GDP

United States
Total World China (GDP: Japan: (GDP:
(GDP: 20.49
GDP - $91.98 Tn 13.4 trillion) 4.97 trillion)
trillion)

Germany: United
France: (GDP: India: (GDP:
(GDP: 4.00 Kingdom: (GDP:
2.78 trillion) 2.72 trillion)
trillion) 2.83 trillion)

Italy: (GDP: Brazil: (GDP: Canada: (GDP:

2.07 trillion) 1.87 trillion) 1.71 trillion)
INDIA GDP Pattern (In $ Billion)
India GDP – Sectoral Contribution (%)

GDP Pattern
120%

100%

80%
52% 53% 54% 54% 56% 56% 57% 57% 58% 59% 58%

60%

40%
31% 30% 29% 28% 28% 27% 27% 27% 26% 24% 23%

20%

17% 17% 17% 17% 17% 16% 16% 17% 16% 17% 18%
0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Agriculture Industry Service

Inflation -CPI

• Inflation refers to the rise in the prices of most goods and services of daily or common use, such as food,
clothing, housing etc.
• Inflation measures the average price change in a basket of commodities and services over time.
• In India we use CPI
• Consumer Price Index is a measure of change in retail prices of goods and services consumed by defined population
group in a given area with reference to a base year.
• Price data are collected from selected towns by the Field Operations Division of NSSO and from selected villages by
the Department of Posts.
• Price data are received through web portals being maintained by the National Informatics Centre (NIC).
CPI
• Currently, CPI in India is calculated by taking a basket of 299
commodities 
• The retail price change of goods and services are taken and by taking
the average weighted value of each item in the basket.
• What are the different CPIs in India?
• CPI for Agricultural Laborares (CPI-AL)
• CPI for Industrial Workers (CPI-IW)
• all India CPI (of CSO)  (official index since 2014)

• What is the importance of retail inflation?

Other Indicators
• IIP
• Index of Industrial Production data or IIP as it is commonly called is an index
that tracks manufacturing activity in different sectors of an economy.
• The IIP number measures the industrial production for the period under
review, usually a month, as against the reference period.
• Electricity, crude oil, coal, cement, steel, refinery products, natural gas,
and fertilisers are the eight core industries that comprise about 40
percent of the weight of items included in the Index of Industrial
Production.
• Mining, manufacturing, and electricity are the three broad sectors in
which IIP constituents fall.
Manufacturing PMI
• The Manufacturing Purchasing Managers' Index (PMI) is an index
incorporating survey firms throughout the country. results conducted on
manufacturing
• > 50 economy contradicting
• < 50 economy expanding
• Provides direction to future economic data
• While manufacturing accounts for a far smaller percentage of economic
output than services, it is far more cyclical and is therefore a useful
indicator of where in the economic cycle the economy is currently
situated
Service PMI
• The Services PMI provides advanced insight into the services sector,
• Giving investors a better understanding of business conditions
• Valuable information about the economic backdrop of various markets.
• Services PMI also provides the stock market an indicator of whether the current
economy is healthy or not, which generally translates to higher corporate profits.
• In the bond market, they do not prefer rapid growth and are extremely sensitive if
the economy is causing potential inflationary pressures.
• The PMI data are also used by the Reserve Bank of India to help make interest rate decisions.
• Policymakers and traders watch these surveys closely as purchasing managers
usually have early access to data about their company’s performance, rather than
waiting for the hard data to emerge.
•.
PMI