Introduction and National

Income Accounting
Macroeconomics
Session 1 & 2
American
Way with
the highest
standard
of living in
the roaring
1920s

Breadlines
in the
1930s
during the
Great
Depression
 What Changed………..
• Was it the case that the factories/farms and workers that
were producing the goods in the 1920s were no longer there
in the 1930s

• Or, the factories and workers were still there, but they were
not coming together due to fear that output produced may
not be sold

• If the productive capacity is there, but firms are not

producing due to fear of lack of demand, then there is an:
Output gap = Potential output – Actual output
Key Questions in Macroeconomics
• Why do we have periods of economic
expansion and recession?

• What are the causes of inflation?

• Should the government intervene?

• What should be the nature of intervention ?

 What is Macroeconomics?
• Microeconomics : Behavior of individuals and firms

• Macroeconomics : Deals with aggregates, issues that have

to do with overall behavior of economy, how policies can
impact the economy’s performance

• Example : micro deals with individual agri markets and

medical services markets etc, macro takes all goods as one
market, all types of labor as one single market
– In a recession demand for nearly all types of goods and labor
decline
Macroeconomics focuses on four markets

• Goods or output market – the market for goods

available for immediate or current use

• Bond market – the market for future goods

• Money market – asset used to purchase/sell goods

• Labour market – market for factor of production

that produces goods
Time Frames: Long-run, short run, medium run
• Very long run growth of income per person in the U.S. over last
century  growth of 2-3% per year
• Per capita GDP in India grew at 1.25 % per year between 1950 to
1980, which increased to around 4 % for the subsequent 4
decades.

[Insert Fig.1-1 here]

1-7
Time Frames: Long-run, short run, medium run

• Sustained economic growth/lack of it are a subject matter of (very) long run

– Economic growth depends on the productive capacity of the economy which increases
with the capital stock (more factories, infrastructure) and technology. Thus, output in
the long run is fixed for a given productive capacity, while prices are variable depending
upon the level of demand.

• Booms and recessions are the story of the short-run

– It depends upon the fluctuations in the demand. How much of the available capacity is
used will determine the level of output and employment. Thus, output is variable, while
prices are fixed/rigid.

– The Macro-course focuses mainly on the short – medium term issues.

– Long-run framework are subject matter of courses on economic growth and
development
– We will discuss the graphs for long-run and short-run AS-AD graphs in post mid-term
sessions
 The Course of Course
• National Income Accounting: GDP, Price Indexes

• Economy in the Short Run: Goods and money markets, deriving

the equilibrium, role of the government

• Economy in the Medium / Long Run: Aggregate Demand and

Supply, Inflation, unemployment

• International linkages: exchange rate, trade, capital flows

 National Income
Accounting

McGraw-Hill/Irwin 2-10
Macroeconomics, 10e © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
 Learning Objectives
• Understand circular flow of income and output

• Define gross domestic product (GDP)

– Various approaches to estimate GDP

• Savings-Investment Identity (and few other identities)

• Distinguish between nominal GDP and real GDP, discuss other

prices indexes

• Understand the limitations of GDP

 National Income Accounting
• Gross Domestic Product (GDP)
– The total market value of all final goods and
services produced by factors of production
located within a nation’s borders
 Factor Payments (Y): Rent, wages, interest, profit

Factors of production: Land, labour, capital, and entrepreneurship

Households Firms

Goods & Services for consumption (C)

Payment for Consumption Expenditure

Dashed lines: Flow of real resources (Goods, Services, factors of production)

13
Solid lines: Monetary flows
Blue lines: Factor flows/factor payment flows
Red dashed lines: flows for final demand (C,I,G) in goods market
 The Simple Circular Flow
• Two observations
– In every economic exchange, the seller receives
the same amount that the buyer spends.
– Goods and services flow in one direction and
money payments flow in the other.
 The Simple Circular Flow
• Profits explained
– Question
• Why is profit a cost of production?
– Answer
• Profits are the return entrepreneurs receive for the
risk they incur when organizing productive activities
 Circular Flow - Simple
Assumptions:
• Only two sectors
• Consumers (Households) and Producers (Firms)
No government and no international trade (Closed
economy)

• Consumers spend all their Income on goods an

services
• Consumers are the owners of productive resource -
land, labour, capital and enterprise

Total Output = Total Income = Total Expenditure

O = Y = E 16
Dashed
lines: Factor Payments (Y): Rent, wages, interest, profit Solid
lines:
Flow of
Monetary
real
Factors of production: Land, labour, capital, and entrepreneurship flows
resources

Households Net Export (X- M) Firms

Goods & Services for consumption (C)

Investment (I)

Payment for Consumption Expenditure

Savings Asset Market

Fiscal Deficit 17

Taxes Government (G) Taxes

Transfers Transfers
 Labels for previous slide
• Dashed lines: Flow of real resources (Goods, Services, factors of
production)
• Solid lines: Monetary flows
• Blue lines: Factor flows/factor payment flows
• Red dashed lines: flows for final demand (C,I,G)
• Black Lines: Transfer payments/channeling of savings from savers
to borrowers (not counted in GDP)

• Red dashed line from industry to government is bidirectional. Beacause,

along with factor demand from households (Doctors, teachers),
government also buys goods & services from firms (Blackboards,
medicines, etc.)
 What is the value of final output
• Farmer produces 50kg wheat. Sells it @ Rs 15/kg to
baker (all 50 kg)
• Baker produces 50 kg of bread using 50 kg of wheat
and sells it to consumers @ Rs 20/kg (all 50 kg)

• Total value of output

• Contribution of different sectors in output
• Avoid double counting…..
GDP Sectoral GDP (contribution)
  Bread   Wheat Bread Total
Q 50 Q 50 50 
P 20 P 15 5 
Total 1000 Total 750 250 1000
Expenditure approach Gross Value Added approach/production approach
 Final and Intermediate Goods
• What is a final good?
– Wheat?
– Bread?

• Intermediate Goods
– Goods used up entirely in the production of final
goods
 What is the value of Final Output
• Wheat produced by farmer: 50kg
• Sold to baker: 30Kg @ Rs15/kg. 20 kg was retained by farmer for
consumption in family
• Baker hired some additional workers and Produced 30 Kg of bread.
• Sold 30 kg of bread @ Rs 20 per kg.
Expenditure approach Gross Value Added approach/production approach
  Wheat Bread     Wheat Bread  
Q 20 30  Q 50 30 
P 15 20  P 15 5 
Total 300 600 900 Total 750 150 900

Keep all the above assumptions same except that- after producing 30 kg
bread- instead of 30 kg, the baker sold only 20 kg of bread @ Rs 20 per kg.

Total change in GDP : No Change (10 kg unsold bread will become part of inventory)*
*We are ignoring the value added in marketing and selling. If the value/cost of these services is 2 rupees, then the
inventory will worth Rs 18 rather than 20. Ignore this distinction at the moment, as we have defined only two economic
activities: producing wheat, and making bread. We have not introduced retailing as a third economic activity.
• Workers are paid salary in the current year, and actual output
is produced in the current year, so we add inventory in the
GDP
– Presume that the producer has sold the goods to herself, and made
an investment in inventory

• In case, we believe that the goods will become worthless and

cannot be sold next year, then we do not add it in GDP
– Salaries will be paid this year, output (worthless) will be produced
this year, and an equal amount of loss would be incurred.
– Thus, factor payments and output for these unsold goods become
zero.
 Three Approaches of Measuring GDP
• Expenditure Approach
– Computing national income by adding up the value at current
market prices of all final goods and services
• C + I + G+ X –M

• Income Approach
– Measuring national income by adding up income received by all
factors of production

• Production approach
– Computing value added at each stage of production by deducting
value of intermediate products from the output produced.
Dashed
lines: Factor Payments (Y): Rent, wages, interest, profit Solid
lines:
Flow of
Monetary
real
Factors of production: Land, labour, capital, and entrepreneurship flows
resources

Households Net Export (X- M) Firms

Goods & Services for consumption (C)

Investment (I)

Payment for Consumption Expenditure

Savings Asset Market

Fiscal Deficit 24

Taxes Government (G) Taxes

Transfers Transfers
Deriving GDP by the expenditure approach

• Consumption Expenditure (C)

– Durables, Nondurables, Services

– Food & Non-food items

– Construction of residential buildings is a part of

investment rather than consumption. Imputed
rent is part of consumption.
 Deriving GDP by the expenditure approach

• Gross Domestic Investment (I)

– The creation of fixed investment (factories and
machines), residential buildings, and inventories
that can yield production and hence consumption
in the future
• Recall, the inventories built by the bakery was counted
as a part of the GDP, it adds to inventory

– A car bought by Reliance would be investment.

Same car bought by Mukesh Ambani would be
private final consumption expenditure.
 Deriving GDP by the expenditure approach

• Government Expenditures (G)

– State, local, and federal
– Valued at cost: for producing services such as
governance, education, health, etc.
 Only Direct Expenditure on Goods and
Services by Government is Included in G
• Transfer payments such as interest payment,
pension, cash transfers, etc. are not counted:
As they are not linked to any production in
current year

• Why
• Distinction between interest paid by private
sector and government
 Deriving GDP by the expenditure approach

• Net Exports (Foreign Expenditures)

– When foreigners buy Indian goods, we earn factor
income but do not make any expenditure (for C or
I or G)
– When we import goods, we make an expenditure
(on consumption/government/investment) but do
not earn any factor income.

Net exports (NX) = total exports (X) - total imports (M)

Mathematical representation of expenditure
approach

GDP = C + I + G + X-M
 Deriving GDP
by the Income Approach
• Gross Domestic Income (GDI)
– The sum of all income—wages, interest, rent, and
profits—paid to the four factors of production
 Value of GDP ??
(1) (2) (3) (4)
Stages of Sales Cost of Value added
Production Receipts Intermediate (wages, profits, etc.)
products (4) = (3) – (2)

Wheat 23 0 23
Flour 53 23 30

Baked Dough 110 53 57

Final Product 200 110 90

   
Total 386 186 200
 Introduce Indirect Taxes
• Let’s say the government levies 5% GST on the
200 rupees worth restaurants meal

• Consumer pays 210 (inclusive of GST) but factor

production receives only 200

• Thus, 10 must be added to the total factor

payment to get the value of GDP at market prices
 Value of GDP ??
(1) (2) (3) (4)
Stages of Sales Cost of Value added
Production Receipts Intermediate (wages, profits, etc.)
products (4) = (3) – (2)

Wheat 23 0 23
Flour 53 23 30

Baked Dough 110 53 57

Final Product 200 110 90

   
Total 386 200
Final +GST 210 186 10 (GST)
Product Approach Earning (Income) Approach Value added Approach
(Expenditure (production Approach)
Approach)
Compensation of employees
(Wages, salaries, etc.)
Consumption
Corporate profits Difference between Gross
Gross Domestic Value of Output and
Investment Other property income (rent, intermediate inputs
interest, proprietors' income)  (GVA = GVO – IC)
Government
Purchases
depreciation
Net Exports   Net production
Net production taxes/Indirect taxes/Indirect taxes net of
  taxes net of subsidies subsidies

Notice the addition of indirect taxes net of subsidies

GDP at Factor cost vs Market Prices
• A mobile company imports inputs worth Rs 6000.
• Gives salary of Rs 3000.
• Earn operating profit of Rs 1000.
• Factory gate price of output is Rs 10000.
• GDP at factor cost: 4000

• Company pays excise duty worth Rs 2000.

• Gets subsidy of Rs 500.
• Sells mobile to a consumer at Rs 11500.

• Final expenditure (C) = 11,500

• Imports: 6000
• GDP at Market Prices = 11500 – 6000 = 5500 (Expenditure approach)
• GDP at factor cost = 3000+ 1000 (Income approach) or 10000 – 6000 (Production/GVA
approach)
• GDP at market prices: 4000 + 2000 – 500 = 5500
• (GVA + Indirect taxes – subsidies)
 GDP at factor cost and market prices
• GDP at factor cost: Gross value added that is received as
factor income by factors of production
• Indirect Taxes: non-factor expense items
– All business taxes except the tax on corporate profits (e.g.,
sales, excise, VAT, customs)
• Subsidies: Forms part of factor income but not market prices
(say subsidies given to firms under make in India program)

• GDP at Market Prices = GDP at factor cost + Indirect

taxes – Subsidies
 Gross vs Net Domestic Product

• Depreciation and net domestic product

– Deducting for depreciation (Consumption of
fixed capital)
• Reduction in the value of capital goods over a one-
year period due to physical wear and tear, and also
to obsolescence

NDP = GDP - CFC

 GDP and NDP

• GDP = C + I + G + NX
• NDP = C + I + G + NX - depreciation
• Net Investment = I - depreciation
– Domestic investment minus an estimate of the wear and
tear on the existing capital stock
 Why do we focus on gross rather than net

• You made an investment of 1500 Cr of which, 600 Cr is

for depreciation, and 900 is net additional to capital
stock

• From the growth perspective, 900 is meaningful as it

gives sense of expansion in productive capacity

• But in short-run, output is determined by the

utilization of productive capacity, that is demand.
Entire gross investment is demand
 GDP and GNP
• GDP refers to the output/income produced within the geographic boundaries of
the nation

• National income/product is the income accrued to the factor of production that

are resident of the country. (Keep the distinction between citizen and resident in mind).

• GNP = GDP + NFI (Net factor income from abroad)

• Labor:
– An IIM Professor giving receiving honorarium for a lecture in Harvard would be part of
the US GDP but Indian GNP.
– A foreign consultant on 2 months assignment will add to Indian GDP but not GNP.
• Capital:
– If you hold shares in Microsoft or own the US treasury bonds, the dividends/interest
income will add to Indian GNP.
– Maruti’s royalty/dividend payout to Suzuki will be a part of the Japan’s GNP.
• The distinction between GDP and GNP is more important for small countries like Ireland,
Iceland, and tax-heaven countries with lot of NFIs.
 Saving Investment Identity
• Y = C + I + G+ X – M
• Let’s call Tax = Tax revenues of the government,
• TR = Transfers payments by the government, then
• Y – Tax + Tra = C+ I + (G- Tax + Tra) + X - M
Disposable Income of Private Fiscal deficit of
Sector/Household (who own the government
the factors of production

• Y – Tax + Tra - C = I + (G- Tax + Tra) + X - M

S Household
S Household = I + Dissaving Government + (X- M)

Household savings funds domestics investments, fiscal deficit,

and trade surplus (lending to foreigners)
 Saving Investment Identity
• Open economy with firms, households, and
government
• (Y – Tax + Tra-C) + (Tax – Tra - G) = I + + X - M
S Household S Government

• Can the fiscal deficit/government dis-savings

translate into trade deficit?
 Look for Linkages between Twin Deficits and
Road to 1991 Crisis
1975/76 to 1979/80 to 1982/83 to 1985/86 to
Component 1978/79 1981/82 1984/85 1989/90
Savings (private) 16.6 17.2 15.2 17.9
Investment (private) 11 12.6 9.4 11.9
Fiscal Deficit 4.8 5.7 7.1 8.4
Current Account Deficit -0.8 1.2 1.4 2.4

Based on Joshi & Little, 1994

 Exclusions
• Exclusion of financial transactions, transfer
payments, and secondhand goods
– Numerous transactions occur that have nothing
to do with final goods and services being
produced.
 Exclusions
• Financial transactions
– Securities
• Stocks and bonds
– Government transfer payments
• Social Security
• Unemployment compensation
– Private transfer payments
• Individual gifts
• Inheritance

• Brokerage would be counted

 Exclusions
• Transfer of secondhand goods
– Sale of a used car, stereo, house, etc.
– Reseller’s margin would be counted

• Other excluded transactions

– Household production of services are excluded (except
rental services). Commodities like agricultural items are
counted
– Legal underground transactions (Partly captured)
– Illegal underground transactions
– Leisure time (Do we add any value/welfare during that
time)
 Recognizing GDP Limitations
• GDP’s limitations
– Excludes non-market production
– Different countries have different legal versus illegal activities
– Expenditure on human capital considered as consumption expenditure not
investment
– How to value the internet economy (services provided by google, Facebook, etc.)
– No accounting for “bads” such as crime and pollution
– Quality of life is not measured
– GDP poorly measures a nation’s well-being, particularly after certain income
level

– Remember, a scale even with wrong calibration but consistently used can still
give useful data and results…..!!

https://www.weforum.org/agenda/2019/05/an-economist-explains-how-to-value-the-
internet/
Inflation and Prices Indexes
 Nominal and Real GDP
• If the GDP in terms of INR increases over the years, then
– Total production may increase
– Prices can increase
– Both

• Nominal GDP
– Value of output at prices prevailing in the year of production itself

• Real GDP (Constant prices)

– Current year output produced valued at prices in some specific
year.
 Production (Kg) Prices (Rs)

Index of
Nominal GDP Nominal
Year Wheat Potato Wheat Potato (Rs) GDP

2010 10 5 10 20 200 100

2011 10 5 20 40 400 200
2012 20 10 20 40 800 400
2013 40 20 40 80 3200 1600
𝑁
 
𝑁 𝑜𝑛𝑚𝑖𝑛𝑎𝑙 𝐺𝐷 𝑃𝑡 =∑ 𝑃 𝑡𝑖 ∗𝑄𝑡𝑖  𝑁 𝑡 𝑡
𝑖=1
Nominal
𝑃
∑ 𝑖 𝑖∗ 𝑄
𝑖=1 *100
Superscript t = year, GDP
Index =  𝑁 𝑏 𝑏
i= commodities
𝑃
∑ 𝑖 𝑖∗ 𝑄
  𝑁 𝑖=1
2013 2013
𝑁 𝑜𝑛𝑚𝑖𝑛𝑎𝑙 𝐺𝐷 𝑃20 13=∑ 𝑃 ∗𝑄 𝑖 𝑖 Superscript b = base year
𝑖=1
 Production (Kg) Prices (Rs)
Real GDP Index Real
(In 2010 of Real GDP
Nominal Rs or GDP Growth
Year Wheat Potato Wheat Potato GDP (Rs) prices)
100
2010 10 5 10 20 200 200
2011 10 5 20 40 400 200 100 0
2012 20 10 20 40 800 400 200 100
2013 40 20 40 80 3200 800 400 100
𝑁   𝑁
  20 10 20 13
𝑅𝑒𝑎𝑙 𝑏 𝐺𝐷 𝑃 𝑡=∑ 𝑃 ∗𝑄 𝑏
𝑖
𝑡
𝑖 𝑅𝑒𝑎𝑙 2010 𝐺𝐷 𝑃2013=∑ 𝑃 ∗𝑄 𝑖 𝑖
𝑖=1 𝑖=1
Superscript b = base year
 
*100
𝐼𝑛𝑑𝑒𝑥 𝑜𝑓 𝑅𝑒𝑎𝑙 𝐺𝐷𝑃=

% Δ in Real GDP = [{Real GDP (t+1) - Real GDP (t)} / Real GDP (t)] *100
 1 2 3 4 5 6 6 7
Index of Real GDP
Nominal Nominal Real GDP (In Index of Growth Price Index
Year GDP (Rs) GDP 2010 Rs) Real GDP Rate (3/5)*100
Inflation Rate
2010 200 100 200 100 
100  
2011 400 200 200 100 0
200 100
2012 800 400 400 200 100
200 0
2013 3200 1600 800 400 100
400 100

Price Index (P)= (Index of Nominal GDP / Index of Real GDP)*100

 Inflation (
*100 𝑃𝑡 =𝑃𝑡 − 1+(𝑃𝑡 − 1 ∗ Π)
 

This price index is termed as GDP deflator.

By deflating GDP by this (and multiplying by 100) we can convert nominal GDP into
real GDP
 Nominal GDP index = ( 𝑃𝑟𝑖𝑐𝑒 𝑖𝑛𝑑𝑒𝑥 ∗ 𝑅𝑒𝑎𝑙 𝐺𝐷𝑃 𝐼𝑛𝑑𝑒𝑥 )
100
 CPI and WPI
Consumer Price Index (CPI): Weighted
average of proportionate changes in 𝑝𝑡𝑖
•𝐶𝑃𝐼
  / 𝑊𝑃𝐼 =¿
 
prices of a fixed basket from the base ∑𝑝 0
s 0i
𝑖
year that is purchased by consumers
  𝑝𝑡𝑖 0 0
∑ 𝑝0 𝑝𝑖 𝑞 𝑖
Wholesale Price Index (WPI): Weighted 𝑖

average of proportionate changes in ∑ 𝑝0𝑖 𝑞 0𝑖

prices of a fixed basket from the base
year that is sold by producers ∑
  𝑝𝑡𝑖 𝑞 0𝑖
0 0
∑ 𝑖 𝑞𝑖
𝑝
What are the weights ??
• Share of each item of the Where i is all products
basket in the total expenditure from 1 to n
s= share of the item in
total expenditure
If producers are receiving higher prices from
their sales to wholesalers we can expect that
retailers would have to charge higher prices
soon that gets reflected in a higher CPI.
 Price Indexes
Laspeyres index: Paasche index:
e.g. CPI/WPI e.g. GDP deflator

Prices of constant basket from Prices of constant basket from

year 0 (base or reference year year t ( base or reference year)

pt = price in time period t qt = quantity in time period t

p0 = price in the base period q0 = quantity in the base period

 Differences between various price indices
Item CPI WPI GDP Deflator
Price of domestically produced
capital goods Excluded Included Included

Price of imported capital goods Excluded Included Excluded

Price of imported consumer
goods Included Included Excluded

Services Included Excluded Included

Fixed Basket change
Fixed Currently every year (But the
Currently (2011-12) base year for fixed
Basket (2012) prices is 2011-12)
Frequency Monthly Monthly Quarterly/Annual

Core inflation: Measured by excluding the volatile components (food and energy)
 Released
Price Index in India Purpose by Question Posed
CPI (Consumer Price Index)

CPI IW (Industrial
worker) Track prices of
consumption By how much, the price of a
– CPI AL/RL (Agricultural basket used by Labour fixed basket from a base year
Labour/Rural Labour) various categories Bureau  has risen in the current year.
– CPI R/U/C of workers/
(Rural/Urban/Combined) households NAD
Department (If the price of the fixed
WPI To track prices of of Industrial basket from the base year
(Wholesale Price Index) commodities at Policy and has risen by 30 % then the
wholesale level Promotion
index is 130)

By how much, the prices have

(National risen if the outputmproduced in
GDP Deflator
Account
To segregate Division) the current year, is purchased
quantum output NAD at current prices compared to
from nominal the base year prices?
GDP
If the current years basket being
purchased at 130 could have been
purchased at 100 in the base year,
index will be 130
 Composition of Consumption Basket for CPI
(Weights, Index, and Inflation)
Combined (R + U)
Group Sep 19 Sep 20 Inflation
Weights
Index Index Rate
Food and beverages 45.86 147.0 161.3 9.73
Pan, tobacco and intoxicants 2.38 166.5 184.5 10.81
Clothing and footwear 6.53 147.9 152.4 3.04
Housing 10.07 152.2 156.5 2.83
Fuel and light 6.84 139.2 143.2 2.87
Miscellaneous 28.32 140.7 150.4 6.89
General Index (All Groups) 100.00 145.8 156.5 7.34

• Calculate the inflation rate from index

• Calculate the overall value of index by combining index for

individual items and their weights
 How inflation affects you?
• Does it make you “poor”?
• Inflation and interest rates
– Nominal Rate of Interest
• The market rate of interest expressed in today’s in Rs
that you would receive/pay per Rs 100.
– Real Rate of Interest
• The nominal rate of interest rate minus the inflation
rate
• Real interest rate
– Nominal interest rate = 10%
– (Expected) inflation rate = 6%
– Real rate = 10% – 6% = 4%
 Why the CPI and other price indices may
overstate inflation
• Substitution bias
– The CPI uses fixed weights, so it cannot reflect consumers’ ability to substitute
toward goods whose relative prices have fallen.
– This happens whenever the price and quantity relatives (weighted by volumes) are
negatively correlated

• Introduction of new goods and improvement in quality

– The introduction of new goods makes consumers better off and, in effect, increases
the real value of the dollar. But it does not reduce the CPI, because the CPI uses
fixed weights.
– Unmeasured changes in quality: Quality improvements increase the value of the
dollar but are often not fully measured. e.g., Health and education services
– Hedonic valuation: TV/Fridge/computer/mobile may become cheaper in reality,
but not for CPI
 Indian Economy Since Independence
Indicator 1950-51 1960-61 1970-71 1980-81 1990-91 2000-2001 2010-11
Per capita GDP (Rs) at Growth Rate (% CAGR)
GDP (Constant) 7,114 8,889 10,016 10,712 14,330 20,418 36,202
Growth Rate   2.25 1.20 0.67 2.95 3.60 5.89
GDP (Current) 264 373 763 1852 5621 17381 54021
Growth Rate   3.52 7.44 9.27 11.74 11.95 12.01
Population(Crores) 35.9 43.4 54.1 67.9 83.9 101.9 118.6
Components of GDP (%)
PFCE (C) 84.6 81.1 75.5 73.7 63.5 63.4 54.3
GFCE (G) 5.8 6.9 9.4 10.1 11.9 12.6 11.4
GCF (I) 9.3 14.3 15.1 19.2 26.0 24.9 38.6
Exports (X) 7.1 4.4 3.7 6.0 6.9 12.8 22.0
Imports (M) 6.8 6.7 3.8 9.1 8.3 13.7 26.3
Composition of GNP
NDP_FC 91.8 90.9 87.9 83.6 83.0 83.4 84.4
CFC (Dep.) 5.1 4.5 5.9 7.6 9.0 9.5 9.8
Indirect taxes- subs. 3.5 5.0 6.8 8.6 9.3 8.1 6.9
Net factor income -0.4 -0.4 -0.6 0.2 -1.3 -1.0 -1.1
Base year 2004-05 Source: Basic Data Back Series 2015
 Sectoral Composition of GDP (%)

17.76

33.52

52.22 54.77

27.48

14.27

2018-19
1950-51
Agriculture Industry Services

Source: Basic Data Back Series 2015 and NAS 2020

 What gets measured, gets managed……

Peter Drucker

For latest data on GDP: http://mospi.gov.in/publication/national-accounts-

statistics-2020

For other macro and survey data: http://mospi.gov.in/download-tables-data

Sources and Method, 2012, National Accounts Division
• Distinguish between Wealth and Income

• Stock and flow variables

 Counting
Natural Resources extraction
Source: rbi.org.in