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2. GDP: Gross Domestic Product
• Concept: GDP is the market value of all the
final goods & services produced with in a
country in a given period of time
• Calculation of GDP: Three Methods
The Production approach
The income approach
The expenditure approach
06/03/2016
3. Production Approach:
GDP at factor cost = P1Q1+P2Q2+P3Q3….+PnQn
Where: Pi = Price of final good i
Qi= Output of final good I
n = Number of g&s in the economy
The production sector is conveniently classified
in to (a) Primary, (2) Secondary, (3) Tertiary
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4. Income Approach:
NDP at factor cost = W+R+I+P
W - Wages
R - Rent
I - Interest
P - dividend+ Retained Earnings + Corporate tax
06/03/2016
5. Expenditure Approach:
GDP at market price = C+I+G+X-Z
Where: C= Domestic Consumption
I = Gross investment Expenditure
G= Govt. Expenditure
X = Exports Expenditure
Z = Import Expenditure
06/03/2016
7. Comparison with Developing Nations:
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Brazil 4.2 1.9 1 -0.2 5.1 2.3 3.7 5.4 5.1 5.2
Russia 6.3 4 4.2 7.3 6.7 6.4 6.7 8.1 5.6 5.2
India 6 4.3 4.3 8.3 6.2 8.4 9.2 9 7.4 8.6
China 8 8 8 9.1 9.1 10.2 10.7 11.9 9 10.7
South Africa 3 2.6 3 1.9 3.5 4.9 5 5.1 3.1 4.8
-2
0
2
4
6
8
10
12
14
Growthrate(%)
Comparison of GDP - real growth rate (%) of India from Developing Nation
Source: www.economywatch.com
8. 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
UK 3 1.6 1.6 2.2 3.2 1.9 2.8 3.1 0.7 1.7
US 5 0.3 2.45 3.1 4.4 3.2 3.2 2 1.1 2.9
NORWAY 2.7 1.6 1.6 0.6 3.3 4 4.6 3.7 2.6 -1.4
JAPAN 1.3 -0.3 -0.3 2.7 2.9 2.6 2.2 2 -0.7 -0.3
INDIA 6 4.3 4.3 8.3 6.2 8.4 9.2 9 7.4 8.6
-2
0
2
4
6
8
10
Growthrate(%)
GDP - real growth rate (%) of India comparing to developed countries
Comparaison with Developed Nations:
Source: www.economywatch.com
9. Per Capita Income:
Concept: Per capita Income means how much an
individual earns, of the yearly income that is
generated in the country through productive
activities
Methods of Calculation:
Atlas Method
PPP method
06/03/2016
10. 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
India 2200 2540 2540 2900 3100 3400 3800 2600 2500 3290
0
500
1000
1500
2000
2500
3000
3500
4000
(US$)
GDP - per capita (PPP) INDIA
Glimpse of Per Capita Income:
11. 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
UK 22800 25300 25300 27700 29600 30100 31800 35000 35500 36068
Switzerland 28600 31700 31700 32700 33800 32200 34000 40100 40000 41765
Japan 24900 28000 28000 28200 29400 31600 33100 33500 33400 33828
Norway 27700 31800 31800 37800 40000 42800 46300 53300 54900 52238
United States 36200 36300 37600 37800 40100 41600 44000 45800 46300 47132
India 2200 2540 2540 2900 3100 3400 3800 2600 2500 3290
0
10000
20000
30000
40000
50000
60000
MoneyinUS$
Comparison 0f GDP - per capita (PPP) of India from developed
countries
Comparaison with Developed
Nations
12. 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
BRAZIL 6500 7400 7600 7600 8100 8300 8800 9500 9400 11514
RUSSIA 7700 8800 9300 8900 9800 11000 12200 14800 14000 10521
INDIA 2200 2540 2540 2900 3100 3400 3800 2600 2500 3290
CHINA 3600 4600 4400 5000 5600 6800 7700 5400 4900 7518
SOUTH AFRICA 8500 9400 10000 10700 11100 12200 13300 9700 9500 10505
0
2000
4000
6000
8000
10000
12000
14000
16000
MoneyinUS$
GDP-per capita comparing to developing countries (BRIC+SA)
Comparaison with Developing Nations
Key factors behind the 9% growth estimates include sustained trends in savings and investments, due to favourable demographics and a thrust on infrastructure development; continued momentum in services, with financing, insurance, real estate, transport and communication being high-growth categories; and efforts toward fiscal consolidation which would facilitate more credit to support growth
Higher infrastructure spending is another reason
Rising oil prices pose a challenge, and the Survey says India must adjust to the reality of expensive energy.
Bring down d inflation external fatcor.