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INDIA’S GDP CONTRACTS 7.5% IN SEPTEMBER QUARTER

INDIA’S GDP CONTRACTS 7.5% IN SEPTEMBER QUARTER

Context

India's Gross Democratic Product (GDP) contracted 7.5 per cent in the quarter ending September as compared to the same period last year.

Details

  • Data suggests a recovery path for the Indian economy in the July-September period after a 23.9 per cent contraction in the previous quarter (April-June) of the current financial year.
  • Indian economy marked a significant improvement over the massive contraction in the previous quarter.

What is GDP?

GDP is the final value of the goods and services produced within the geographic boundaries of a country during a specified period of time, normally a year. GDP growth rate is an important indicator of the economic performance of a country.

How GDP is measured?

It can be measured by three methods, namely,

Output Method: This measures the monetary or market value of all the goods and services produced within the borders of the country. In order to avoid a distorted measure of GDP due to price level changes, GDP at constant prices o real GDP is computed. GDP (as per output method) = Real GDP (GDP at constant prices) – Taxes + Subsidies.

Expenditure Method: This measures the total expenditure incurred by all entities on goods and services within the domestic boundaries of a country. GDP (as per expenditure method) = C + I + G + (X-IM) C: Consumption expenditure, I: Investment expenditure, G: Government spending and (X-IM): Exports minus imports, that is, net exports.

Income Method: It measures the total income earned by the factors of production, that is, labour and capital within the domestic boundaries of a country. GDP (as per income method) = GDP at factor cost + Taxes – Subsidies.

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