The quintessence of the present study is to have an overview of GDP (Gross Domestic Product) and its importance to the economy. In addition the present study also aims to highlight the India’s GDP figures since 1964, recent contribution of various sectors (i.e. agriculture, industry and services) in India’s GDP and impact of LPG (Liberalisation Privatisation Globalisation) policy on India’s GDP.

1. http://www.iaeme.com/ijarm/index.asp 51 editor@iaeme.com
International Journal of Advanced Research in Management (IJARM)
Volume 7, Issue 1, Jan-April (2016), pp. 51-57, Article ID: 10220160701007
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INDIA’S GDP IN PRE AND POST
GLOBALISED ERA: AN APPRAISAL
Vineet Singh
Assistant Professor, Department of Commerce,
Guru Ghasidas Vishwavidyalaya, Bilaspur, Chhattisgarh
ABSTRACT
The quintessence of the present study is to have an overview of GDP
(Gross Domestic Product) and its importance to the economy. In addition the
present study also aims to highlight the India’s GDP figures since 1964,
recent contribution of various sectors (i.e. agriculture, industry and services)
in India’s GDP and impact of LPG (Liberalisation Privatisation
Globalisation) policy on India’s GDP.
Key words: India, GDP, LPG policy.
Cite this Article: Vineet Singh, India’s GDP in Pre and Post Globalised ERA:
An Appraisal. International Journal of Advanced Research in Management,
7(1), 2016, pp. 51-57.
http://www.iaeme.com/IJARM/issues.asp?JType=IJARM&VType=7&IType=1
INTRODUCTION
Gross Domestic Product (GDP) may be defined as monetary value of all goods and
services produced inside a nation’s geographical boundaries within a specified period
of time.
The Organisation for Economic Co-operation and Development (OECD) defines
GDP as “an aggregate measure of production equal to the sum of the gross value
added of all resident, institutional units engaged in production (plus any taxes, and
minus any subsidies, on products not included in the value of their outputs).”
GROSS DOMESTIC PRODUCT (GDP) CALCULATION
GDP of a country is basically calculated by expenditure approach. Under this
approach GDP is calculated by summing up the final uses of goods and services (all
uses except intermediate consumption) measured in purchasers prices. In other words,
in order to measure total production in an economy, the total expenditure of money
which is used to buy things can be measured. This method is commonly recognized as
expenditure method of calculating GDP. Therefore, in order to calculate GDP by
expenditure method the following formula is used:

2. Vineet Singh
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Y = C + I + G (X - M)
Where,
Y = GDP; which is sum of the following:
C = Consumption
I = Investment
G = Government spending
(X - M) = Net exports
• C (consumption) includes private (household final consumption expenditure) in the
economy. These personal expenditures come under one of the following categories
i.e. durable goods and non-durable goods and services. For example consumption
expenditures on food, clothing, jewellery etc. Consumption is the largest constituent
of GDP in the economy.
• I (investment) basically include purchase of equipment and machinery by a business,
purchase of software’s, construction of new mines, spending on new houses by
households etc.
• G (government spending) is the sum total of government expenditures on final
goods and services such as purchase of arms and ammunitions for military, salaries
paid to public servants, and any other investment expenditures made by government.
It may be noted that G (government spending) does not includes transfer payments
such as unemployment benefits.
• X (exports) denotes gross exports.
• M (imports) symbolize gross imports.
OBJECTIVES OF THE STUDY
• To have an overview regarding importance of GDP.
• To analyse the recent contribution of various sectors i.e. agriculture, industry and
services in India’s GDP.
• To estimate the actual figures and growth in India’s GDP before the commencement
of LPG policy (i.e. from 1964 to 1990) and after the commencement of LPG policy
(i.e. from 1991 to 2014).
• To test whether there is a significant difference between India’s GDP values during
(1967 to 1990) and (1991 to 2014), with the help of t-test.
RESEARCH METHODOLOGY
The study is mainly based on secondary data and the relevant information in this
regard has been collected from a number of sources like books, websites, journals,
articles etc. The analysis in this regard has been carried out through various statistical
tools such as average, percentage, t-test etc.
SIGNIFICANCE OF GDP
Gross Domestic Product (GDP) is one of the most important tools to measure the
health of a country’s economy. The vital benefit derived from GDP to a country may
be enumerated as follows:

3. India’s GDP In Pre And Post Globalised ERA: An Appraisal
http://www.iaeme.com/ijarm/index.asp 53 editor@iaeme.com
• Gross Domestic Product incorporates consumer spending, investment expenditure,
government spending and net exports (i.e. exports - imports). Therefore, GDP gives a
true picture of an economy.
• Gross Domestic Product indices provide guidelines to government and economic
decision maker in formulating major economic policies.
• GDP portrays health of an economy. A positive GDP depicts good signals for the
economy where as a negative GDP reveals awful signals for the economy. GDP also
helps economists in finding out that whether the economy is in boom, recession, or
depression.
• Since, Gross Domestic Product is an indicator of fitness of a country’s economy; it
also helps the investors in securities to administer their portfolios.
INDIA’S GDP: AN OVERVIEW
Indian economy and GDP has been classified under three sectors namely:
1. Agriculture which includes crops, milk and animal husbandry, horticulture,
fishing, forestry, sericulture, aviculture, aquaculture and interrelated activities.
2. Industry which embraces a number of manufacturing sub-sectors.
3. Services which incorporates health care, banking, education, hospitality,
construction, retail, software, communication, information technology, insurance and
many other economic activities.
Contribution of Agriculture in India’s GDP
India is second largest country in the world as far as production of agricultural
product is concerned. Punjab, Haryana, Uttar Pradesh, Madhya Pradesh, Gujarat,
Bihar, West Bengal, Andhra Pradesh and Maharashtra, are the prime contributors in
Indian agricultural output. In 2014 the total production of agriculture sector amounted
to U.S. $ 366.92 billion, employed 49% of the total workforce and accounted for 17%
of the GDP. But in recent years (1950 to 2010) the contribution of agriculture to GDP
has steadily declined, the reason behind this can be growth and diversification of
Indian economy.
Contribution of Industry in India’s GDP
The Indian industrial sector has undergone major changes as a result of economic
reforms which took place in 1991. In 1991 LPG (Liberalisation, Privatisation,
Globalisation) policy was adopted which promoted foreign competition and
privatisation of government sector industries, removed trade restrictions, relaxed
government rules and regulations, encouraged FDI and improved infrastructure. All
these measures adopted by government in 1991 have lead to a decent increase in
production figures and today industry accounts for 26% of GDP and employs 22% of
total workforce. As per World Bank figures India’s industrial manufacturing GDP
output in 2015 was 6th
largest in the world on current U.S. $ basis ($ 559 billion).
Contribution of Services in India’s GDP
The GDP of Indian service sector amounted to U.S. $ 1185.79 billion in 2014. Indian
service sector is the largest contributor in India’s GDP accounting for 57% of GDP in
2012. Service sector provides employment to 27% of the work force and is 9th
largest
in the world by nominal GDP and 4th
largest when purchasing power is taken into

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account. Indian service sector has shown a decent increase in GDP contribution since
1950.
Table 1 India’s - Gross Domestic Product since 1964
(In U.S. $ billion)
Year India's G.D.P. Growth in GDP
1964 57.47 ----
1969 59.47 2.00
1974 101.27 41.80
1979 155.67 54.40
1984 215.88 60.20
1989 301.23 85.36
1994 333.02 31.78
1999 466.87 133.85
2004 721.58 254.72
2009 1365.40 643.82
2014 2048.50 683.10
Figure 1 India’s - Gross Domestic Product since 1964
The above table and graph clearly divulge that Indian GDP has shown a drastic
increase after Globalisation. Before globalisation the growth rate in GDP figures was
lethargic which stood at U.S. $ 57.47 billion in 1964 and U.S. $ 301.23 billion in
1989, but after globalisation the GDP values of India has grown tremendously and
stood at U.S. $ 2048.50 billion in 2014.

5. India’s GDP In Pre And Post Globalised ERA: An Appraisal
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Table 2 India’s GDP (1969 to 1991) and (1992 to 2014)
(In U.S. $ Billion)
Year GDP % growth Year GDP % growth
1969 59.47 10.10 1992 293.26 6.70
1970 63.52 6.80 1993 284.19 -3.09
1971 68.53 7.90 1994 333.02 17.18
1972 72.72 6.11 1995 366.60 10.09
1973 87.01 19.66 1996 399.79 9.05
1974 101.27 16.38 1997 423.16 5.85
1975 100.20 -1.06 1998 428.74 1.32
1976 104.52 4.31 1999 466.87 8.89
1977 123.62 18.27 2000 476.61 2.09
1978 139.71 13.02 2001 493.95 3.64
1979 155.67 11.43 2002 523.97 6.08
1980 189.59 21.79 2003 618.36 18.01
1981 196.88 3.84 2004 721.58 16.69
1982 204.23 3.73 2005 834.21 15.61
1983 222.09 8.74 2006 949.12 13.77
1984 215.88 -2.80 2007 1238.70 30.51
1985 236.59 9.59 2008 1224.10 -1.18
1986 253.35 7.09 2009 1365.40 11.54
1987 283.93 12.07 2010 1708.50 25.13
1988 301.79 6.29 2011 1835.80 7.45
1989 301.23 -0.18 2012 1831.80 -0.22
1990 326.61 8.42 2013 1861.80 1.64
1991 274.84 -15.85 2014 2048.50 10.03
Average 177.53 7.64 Average 901.22 9.43
HYPOTHESIS TESTING ON GROWTH TRENDS IN INDIA’S GDP
DURING PRE AND POST GLOBALISATION PERIOD
In order to test whether there is a significant difference between growth trends in
India’s GDP during pre-globalisation period (i.e. 1969 to 1991) and post-globalisation
period (i.e. 1992 to 2014) the following hypothesis is framed and tested through t-test
at 95 % confidence level:
H0 There is no significant difference between growth trends in India’s GDP during
pre-globalisation period (i.e. 1969 to 1991) and post-globalisation period (i.e. 1992 to
2014).
H1 There is a significant difference between growth trends in India’s GDP during pre-
globalisation period (i.e. 1969 to 1991) and post-globalisation period (i.e. 1992 to
2014).

6. Vineet Singh
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t-Test: Two-Sample Assuming Unequal Variances
Parameters
% Growth in India’s GDP
(1969 to 1991)
% Growth in India’s GDP
(1969 to 1991)
Mean 7.637378318 9.425181284
Variance 66.01975438 70.54113293
Observations 23 23
Hypothesized Mean Difference 0
df 44
t Stat -0.733703189
P(T<=t) one-tail 0.233510663
t Critical one-tail 1.680229977
P(T<=t) two-tail 0.467021326
t Critical two-tail 2.015367547
Since, the calculated value of t two tail at .05 level of significance is less than
table of t, alternate hypothesis is rejected and null hypothesis is accepted; hence it can
be concluded that there is no significant difference between growth trends in India’s
GDP during pre-globalisation period (i.e. 1969 to 1991) and post-globalisation period
(i.e. 1992 to 2014).
CONCLUSION
GDP is regarded as one of the significant device to measure the economy’s health. As
far as Indian economy is concerned, there are three major sectors (i.e. agriculture,
industry and service) which are contributors in GDP. With a contribution of U.S. $
1185.79 billion, service sector is the largest contributor in India’s GDP. After the
major economic reforms of 1991, Indian GDP has shown a respectable increase in its
figures, which clearly represents the successful implementation of LPG policy
launched by the government. The above study is also backed by a hypothesis testing
regarding growth trends of India’s GDP in pre and post globalised era, which reveals
that there is no significant difference between growth trends in India’s GDP during
pre and post globalised era.
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