CHITTORGARH

Assignment Report

On

GDP

SUBMITED BY SUBMITED TO
AMIT GHAWARI VIBHOR
PALIWAL
M.B.A 1st Year ( Faculty )
What is GDP? How it is measured?

Gross Domestic Product (GDP) is the most commonly used indicator of national
income.

It attempts to measure the sum of incomes received by the various wealth-creating sectors
of the economy, from manufacturing and retail to agriculture and service industries.

Gross Domestic Product or GDP is the monetary value of all the finished goods and
services produced within a country's borders in a specific time period, though GDP is
usually calculated on an annual basis. It includes all of private and public consumption,
government outlays, investments and exports less imports that occur within a defined
territory.

GDP=C+G+I+NX

where:-

"C" is equal to all private consumption, or consumer spending, in a nation's economy

"G" is the sum of government spending

"I" is the sum of all the country's businesses spending on capital

"NX" is the nation's total net exports, calculated as total exports minus total imports.
(NX = Exports - Imports).

Gross Domestic Product or GDP is the monetary value of all the finished goods and
services produced within a country including the income earned by the people abroad and
deducting the income earned by the foreigners in the country.

GDP = Total income (i.e. total monetary value of finished goods and services of a
country) +income earned by the people of the country in abroad - income earned by the
foreigners in the country.

What is the difference between GDP and Gross National

Product (GNP)?
When the value of income from abroad is included - what domestic companies earn
abroad, minus what foreign companies earn here and send overseas - then the GDP
becomes the Gross National Product (GNP).
This is particularly important for economies with large traded sectors, which includes
many developing countries.
India GDP History
The summary of the India GDP History reflects the entire differential factor that
contributed to the economic growth of India. India GDP History covers the consolidated
reports of Indian Gross Domestic Product at 'cost factor' and at 'actual price'. The growth
in the India GDP History especially, after the 1990s was the result of liberalization of
Indian economy. This renaissance occurred in the wake of balance-of-payments crisis.
The central government of India opened up Indian markets to private investments. This
shift of stance from a highly insulated market to an open market facilitated inflow of
foreign direct investment (FII) and foreign institutional investor (FII). A number of
public sector undertaking were divested to private business house. The post 1990 era
marked the gradual increase in the average GDP of the Indian economy and it used to be
around 4.5% to 5%.

With the astronomical rise in the Indian Information Technology and the Indian BPO
sectors, the GDP of India shoot-up to around 6% in the period from 1988 to 2003. From
2004 onwards the average GDP of India 'at cost factor' reflected a steady growth trend.
This period witnessed rise of Indian GDP fueled by service and manufacturing sector.
The Indian GDP rose to 8.5% during this period and this figure is heading to 9.5% in the
present projections. The finance ministry of India is targeting a GDP growth of more than
10% for the next financial year and it is expected to remain stable even under the current
unstable international market condition.

The post 1990s, growth story of the India GDP History was led by the following sectors
of Indian industry –

• Information Technology
• Information Technology Enabled Services
• Telecommunications
• Electronics and hardware
• Pharmaceuticals and biotechnology
• Consumer durables
• Retail
• Textiles
• Infrastructure
• Construction
• Airlines
• Hospitality
• Power
The stupendous growth of the India GDP History further resulted the growth of the
following economical factors -

• FDI amounted to US$12.5 billion and outpaced portfolio investment of US$6.8

billion
• Central Public Sector Enterprises to invest Rs.165, 053 crore in 2007-08
• New 162 production sharing contracts awarded to Petroleum and Natural Gas
sector
• SMEs has witnessed increase in outstanding credit
• Foreign trade and merchandise exports expected to cross US$125 billion by the
end of the current fiscal
• Provision for tourist infrastructure increased to Rs.423 crore
• Bank's differential rate of interest scheme providing finance at the rate of 4% to
weaker sections
• Regional rural banks to open at least one branch in 80 uncovered districts in 2007-
08
• PAN made sole identification number for all participants of capital market
• Seven ultra mega power projects are under process
• Defense expenditure allocation to increased to Rs.96, 000 crore
• IT allocation for e-governance to increased from Rs.395 crore to Rs.719 crore
• Exclusive health insurance scheme for senior citizens
• Provision for national highway development programme to be increased to Rs.9,
945 crore
• Farm credit target of Rs.225, 000 crore for 2007-08 has been set with an addition
of 50 lakh new farmers to the banking system
• 35 projects have been completed in 2006-07 and additional irrigation potential of
900,000 hectares to be created and training of farmers arranged
• A pilot programme for delivering subsidy directly to farmers have been arranged
• Loan facilitation through Agricultural Insurance and NABARD has also been
facilitated
• Corpus of Rural Infrastructure Development Fund to be raised
 India GDP
The India GDP is the culmination of all the differential factors that contributes to the
economy of India. India GDP reflects a consolidated report of the performance of the
Indian economy. The Indian Gross Domestic Product is determined either by 'cost factor'
or 'actual price' method. The growth of India GDP especially, after the 1990s was the
effect of opening-up of Indian economy. This paradigm shift of Indian economy occurred
in the wake of balance-of-payments crisis in the 1980s. The Government of India opened
up Indian markets to facilitate entry of private investments into the Indian markets. This
change in Indian economic policy, from a highly insulated market to an open market
facilitated inflow of foreign direct investment (FII) and foreign institutional investor
(FII). A good number of Government of India undertakings were divested to private
business house.

The period after the 1990s witnessed sudden incremental growth of the annual average
gross domestic product of the Indian economy and till then it used to be around 4.5% to
5%. With the meteoritic rise of Indian Information Technology, Indian service industry
and the Indian BPO sector, the average Indian GDP skyrocketed to around 6%, during the
period from 1988 to 2003. From the financial year 2004 onwards the average gross
domestic product of India 'at cost factor' reflected a stable growth. This period marks the
meteoritic rise of gross domestic product of India and this rise was affected by service
and manufacturing industry. The Indian GDP registered an impressive growth rate of
8.5% during this period and the present growth target is secured at 9.5% to 10 %.

The latest snapshots of the India GDP are as below -

• The foreign direct investment in the India market amounted to US$12.5 billion
and surpassed portfolio investment of US$ 6.8 billion
• Foreign trade and merchandise exports expected to cross US$125 billion by the
end of the current fiscal
• Provision for national highway development programme to be increased to Rs.9,
945 crore
• Farm credit target of Rs.225, 000 crore for 2007-08 has been set with an addition
of 50 lakh new farmers to the banking system
• 35 projects have been completed in 2006-07 and additional irrigation potential of
900,000 hectares to be created and training of farmers arranged
• A pilot programme for delivering subsidy directly to farmers have been arranged
• Loan facilitation through Agricultural Insurance and NABARD has also been
facilitated
• Central Public Sector Enterprises to invest Rs.165, 053 crore in 2007-08
• 162 new production sharing contracts awarded to Petroleum and Natural Gas
sector

• SMEs has witnessed increase in outstanding credit

• Bank's differential rate of interest scheme providing finance at the rate of 4% to
weaker sections
• Regional rural banks to open at least one branch in 80 uncovered districts in 2007-
08
• PAN made sole identification number for all participants of capital market
• Seven ultra mega power projects are under process
• Defense expenditure allocation to increased to Rs.96, 000 crore
• IT allocation for e-governance to increased from Rs.395 crore to Rs.719 crore
• Exclusive health insurance scheme for senior citizens
• Corpus of Rural Infrastructure Development Fund raised substantially
• Provision for tourist infrastructure increased to Rs.423 crore
 GDP India Statistics
The India GDP statistics reflects the summary of all the differential factors that forms
the basis of Indian economy. Further, the India GDP statistics reflects a cumulative report
of the performance of all the major parameters of the Indian economy. The statistics of
the Indian GDP indicates that the rise of the India GDP after the 1990s was the effect of
opening-up of Indian economy. The paradigm shift of Indian economy from closed-
market to open market took place during the balance-of-payments crisis in the late 1980s.
The Government of India opened up Indian markets to facilitate easy entry of private
investments into the Indian markets. This change in Indian economic policy, from a
highly insulated market to an open market facilitated inflow of foreign direct investment
(FII) and foreign institutional investor (FII).

A good number of Government of India undertakings were divested to private business

house, in the proportion of 25%, 49% and 75%. The post 1990s era recorded sudden
incremental growth of the annual average gross domestic product of the Indian economy.
The period used to register an average annual GDP growth rate of 4.5% to 5%. With the
stupendous growth of Indian Information Technology sector, Indian service industry and
the Indian BPO sector, the Indian GDP skyrocketed to 6% during the period from 1988 to
2003. The period after 2004 marks the astronomical growth of gross domestic product of
India and this rise was initiated by the Indian service and manufacturing industry. The
Indian GDP registered an impressive growth rate of 8.5% during the period thereafter.
The present growth statistics of India's GDP reflects that it is at 9.5% and the target is to
reach an annual average GDP growth of 10 % and sustain it till 2020.

The latest snapshots of the India GDP statistics are as below -

• The growth rate of Indian GDP rose from 9.2% in 2006-07 to 9.5 % till the end of
2nd quarter of the current fiscal
• The foreign direct investment in the India market amounted to US$12.5 billion
and surpassed portfolio investment of US$ 6.8 billion
• Foreign trade and merchandise exports expected to cross US$125 billion by the
end of the current fiscal
• Provision for national highway development programme to be increased to Rs.9,
945 crore
• Farm credit target of Rs.225, 000 crore for 2007-08 has been set with an addition
of 50 lakh new farmers to the banking system
 • 35 projects have been completed in the last financial year of 2006-07 and an
additional irrigation potential of 900,000 hectares to be created and training of
farmers arranged
• A pilot programme for delivering subsidy directly to farmers have been facilitated
• Loan facilitation through Agricultural Insurance and NABARD has also been
extended
• Central Public Sector Enterprises to invest Rs.165, 053 crore in 2007-08
• 162 new production sharing contracts awarded to Petroleum and Natural Gas
industry
• Bank's differential rate of interest scheme providing finance at the rate of 4% to
weaker sections
• Regional rural banks to open at least one branch in 80 uncovered districts in 2007-
08
• Permanent Account Number (PAN) made sole identification number for all
participants of capital market
• Seven ultra mega power projects are under process
• Defense expenditure allocation to increased to Rs.96, 000 crore
• IT allocation for e-governance to increased from Rs.395 crore to Rs.719 crore
• Exclusive health insurance scheme have been introduced for senior citizens
• The budget for the Rural Infrastructure Development Fund raised substantially
• Provision for tourist infrastructure increased to Rs.423 crore
• Small and Medium Enterprises (SMEs) witnessed increase in outstanding credit

The Indian Gross Domestic Product is calculated either by 'cost factor' or 'actual price'
method and thus the statistics of the Indian GDP reflects both the results. The present
status of Indian gross domestic product factor is encouraging and is much more higher
than the world's annual average GDP growth of 5.5%. It is estimated that at this rate of
GDP growth, the Indian economy will become the second largest economy after China in
the next 40 to 45 years.
 Calculating India GDP
Calculating India GDP is extremely important has the performance of the economy is
fixed by means of this method. The results would help the country to forecast the
economic progress, determine the demand and supply, understand the buying power of
the people, the per capita income, the position of the economy in the global arena. The
Indian GDP is calculated by the expenditure method.

By Calculating India GDP the performance of the Indian economy can be determined.
The GDP of the country states the number of goods and services produced in a financial
year. It is the yardstick of measuring the functioning of the economy.

Indian Economy-Facts on India GDP

• The Indian economy is the 12th largest in the world

• It ranks 5th pertaining to purchasing power parity (PPP) according to the latest
calculation of the World Bank
• The GDP of India in the year 2007 was US $1.09 trillion
• India is the one of the most rapidly growing economies in the world
• The growth rate of the India GDP was 9.4% per year
• Due to the huge population the per capita income in India is $964 at nominal and
$4,182 at PPP

Points to remember while calculating India GDP

• Calculating India GDP has to be done cautiously pertaining to the diversity of the
Indian Economy.
• There are different sectors contributing to the GDP in India such as agriculture,
textile, manufacturing, information technology, telecommunication, petroleum,
etc.
• The different sectors contributing to the India GDP are classified into three
segments, such as primary or agriculture sector, secondary sector or
manufacturing sector, and tertiary or service sector.
• With the introduction of the digital era, Indian economy has huge scopes in the
future to become one of the leading economies in the world.
• India has become one of the most favored destinations for outsourcing activities.
 • India at present is one of the biggest exporter of highly skilled labor to different
countries
• The new sectors such as pharmaceuticals, nanotechnology, biotechnology,
telecommunication, aviation, manufacturing, shipbuilding, and tourism would
experience very high rate of growth

How to calculate India GDP

The method of Calculating India GDP is the expenditure method, which is, GDP =
consumption + investment + (government spending) + (exports-imports) and the formula
is
GDP = C + I + G + (X-M)

Where,

• C stands for consumption which includes personal expenditures pertaining to

food, households, medical expenses, rent, etc
• I stands for business investment as capital which includes construction of a new
mine, purchase of machinery and equipment for a
• factory, purchase of software, expenditure on new houses, buying goods and
services but investments on financial products is not included as it falls under
savings
• G stands for the total government expenditures on final goods and services which
includes investment expenditure by the government, purchase of weapons for the
military, and salaries of public servants
• X stands for gross exports which includes all goods and services produced for
overseas consumption
• M stands for gross imports which includes any goods or services imported for
consumption and it should be deducted to prevent from calculating foreign supply
as domestic supply.
 GDP India 2007
The GDP India 2007 represents different important economic parameters like inflation,
purchasing power parity, bank credit, foreign direct investment, excise duty etc. Further,
the GDP India 2007 includes performance of the critical industries like manufacturing,
agriculture, infrastructure, banking and insurance etc.

The achievements of GDP India 2007 are as follows -

Agriculture –

• Farm credit target of Rs.225, 000 crore for 2007-08 has been set with an addition
of 50 lakh new farmers to the banking system
• 35 projects have been completed in 2006-07 and additional irrigation potential of
900,000 hectares to be created in the year 2007- 2008
• Training of farmers arranged according to their needs
• Based on study to be conducted, a pilot programme to be implemented for
delivering subsidy directly to farmer.
• Loan facilitation through Agricultural Insurance, National Bank for Agriculture
and Rural Development
• Corpus of Rural Infrastructure Development Fund to be raised

Investments -

• Gross domestic capital formation in 2005-06 grew by 23.7%; in April- January,

foreign direct investment amounted to US$12.5 billion and outpaced portfolio
investment of US$6.8 billion
• Central Public Sector Enterprises to invest Rs.165,053 crore through internal and
extra budgetary resources in 2007-08

Infrastructure -

• Seven more Ultra Mega Power Projects under process

• Provision for National Highway Development Programme to increase from
Rs.9,945 crore to Rs.10,667 crore

Industry -
 • 162 production sharing contracts awarded in Petroleum and Natural Gas sector
• SMEs has witnessed increase in outstanding credit from Rs.135, 200 crore to
Rs.173,460 crore

Services -

• Foreign Trade and Merchandise exports expected to cross US$125 billion by the
end of the current fiscal
• Provision for tourist infrastructure to increase from Rs.423 crore to Rs.520 crore
• General Review of Financial sector development -
• Bank's differential rate of interest scheme providing finance at the rate of 4% to
weaker sections
• Regional Rural Banks to open at least one branch in 80 uncovered districts in
2007-08
• Housing loans are extended to the weaker sections
• Exclusive health insurance scheme for senior citizens
• PAN to be made sole identification number for all participants of capital market

Others -

• Defense expenditure allocation to increase to Rs.96, 000 crore

• IT allocation for e-governance to increase from Rs.395 crore to Rs.719 crore
• Sarva Shiksha Abhiyan and Mid-day Meal Scheme allocation increased by 35%
• All districts must emphasize on mother and child care and on prevention &
treatment of communicable diseases

The forecasts of GDP India 2007 are as follows -

• Improve GDP growth rate from 9.2% in 2006-07 to 10 % in 2007-2008

• The overall economic growth target is set at 10%
• During three year period, acceleration in growth rate in manufacturing from 8.7%
to 9.1% and then to 11.3% and growth rate in
• services sector from 9.6% to 9.8% and further to 11.2%
• Average growth in agriculture is estimated at 2.3%
• Growth in bank credit, year on year, by 29.6%; expansion in money supply (M3)
by 21.3%, foreign exchange reserves at US$ 180 billion
• Pressure on domestic prices by global commodity prices and supply constraints in
some essential commodities - consequently the
• average inflation in 2006-07 is estimated at between 5.2 and 5.4% in India Union
Budget 2007- 2008
• Allocations for major sectors, like increase in provision for Bharat Nirman by
31.6% from Rs.18, 696 crore to Rs.24, 603 crore, for education by 34.2% to
Rs.32, 352 crore and for health and family welfare by 21.9% to Rs.15, 291 crore
• Faster growth involving each and every Indian industry and sector
• Attain growth rate of approximately 10% by the end of plan period
• Achieve growth of 4% in the agriculture sector
• More faster employment generation
• Reducing developmental and economic gap across different regions
• Ensuring access to basic physical infrastructure and health and education services
to all .