2. Outline of the presentation
β’ GDP
β’ Unemployment and Employment trend
β’ Cost of living
β’ Indiaβs Fiscal deficit
β’ Debt trend
30-10-2018 Macroeconomics 2
3. GDP
β’ GDP is the monetary value of all goods
and services produced in the economy
in a given time period.
β’ Example: Bread and Gun
GDP= ( quantity of bread produced * price of bread ) + (quantity of guns produced *
price of guns )
30-10-2018 Macroeconomics 3
4. Types of GDP
30-10-2018 Macroeconomics 4
GDP
Nominal
Real
Actual
Potential
Total value of all goods & services produced at
current market prices(Includes changes in price
due to inflation or deflation)
Ideal economic condition with
100% employment across all
sectors, steady currency and
stable product prices
Real time measurement of all output
at any time interval or at any given
time(Existing state of business of the
economy)
Sum of all goods & services produced
at constant prices(inflation-adjusted
measurement)
5. GDP Formula:
30-10-2018 Macroeconomics 5
Expenditure
Approach
Income
Approach
Production or
Value-Added
Approach
GDP= Consumption + Government Expenditure + Investments + Net Exports
GDP=Total National Income + Sales Tax + Depreciation + Net Foreign Income
GDP= Sum of the value added to products during production process
6. Calculation of GDP in India:
β’ Production or Value -added Approach
β’ Expenditure
30-10-2018 Macroeconomics 6
Fig.1 Value-added Approach Fig.2 Expenditure Approach
10. 30-10-2018 Macroeconomics 10
Year Old definition & base(GDP growth %) New definition & base(GDP growth %)
2012-13 4.5 5.1
2013-14 4.7 6.9
Previous method vs Current method:
Parameters Previous Current
Price Cost of production Market price
Base year 2004-2005 2011-12
Table 4
Table 3
11. Results of the change:
β’ Reflects the current economic situation.
β’ Complaint with latest United Nation guidelines in System of National
Accounts.
β’ In par with international agencies like IMF, World Bank etc.
30-10-2018 Macroeconomics 11
12. Employment and unemployment trend:
β’ Labour force participation rate
LFPR=
ππ.ππ ππππππ¦ππ ππππ ππ+ππ.ππ π’πππππππ¦ππ ππππ ππ
πππ‘ππ ππππ’πππ‘πππ
*1000
β’ Worker population ratio
WPR=
ππ.ππ ππππππ¦ππ ππππ ππ
πππ‘ππ ππππ’πππ‘πππ
*1000
30-10-2018 Macroeconomics 12
18. Consumer Price Index (CPI)
β’ A statistical estimate of the level of prices of goods and services
bought for consumption purposes by households
β’ Macroeconomic indicator of inflation
β’ Link: https://courses.lumenlearning.com/boundless-
economics/chapter/cost-of-living/
β’ Calculation of CPI for multiple items
CPI for multiple items=
πΆππ π‘ ππ πΆππΌ ππππππ‘ πππ πππ‘ ππ‘ ππ’πππππ‘ ππππππ ππππππ
πΆππ π‘ ππ πΆππΌ ππππππ‘ πππ πππ‘ ππ‘ πππ π ππππππ ππππππ
*100
30-10-2018 Macroeconomics 18
19. Market basket
30-10-2018 Macroeconomics 19
Groups for the revised CPI (Rural/Urban)
Groups Description
1. Food and Beverages
2. Pan, tobacco and intoxicants
3. Clothing and Footwear
4. Housing
5. Fuel and light
6. Miscellaneous(Transportation, Education, Personal care etc)
20. Trend of cost of living in India(2010-2018)
30-10-2018 Macroeconomics 20
22. Fiscal Deficit
β’ Total Government expenditure
more than the revenue
generated
β’ Debts and Deficits
β’ GFD= Expenditure- revenue
30-10-2018 Macroeconomics 22
23. Government Fiscal Deficit:
30-10-2018 Macroeconomics 23
Particulars 2016-17 (in Rs. billion)
Expenditure 19,752
Revenue receipts 13,742
Recovery of loans 176
Other receipts 477
Total Revenue 14,396
Fiscal deficit 5,356
26. Steps taken to reduce fiscal deficit
β’ Reduce Public Expenditure
β’ Increasing Revenue from Taxation
β’ Link: http://www.yourarticlelibrary.com/economics/measures-to-be-
followed-to-reduce-fiscal-deficits/38126
30-10-2018 Macroeconomics 26
27. Indiaβs Debt and Trend
β’ Accumulated government deficits are called Debt
β’ India ranks 22nd in world with debt of $5290 Billion
30-10-2018 Macroeconomics 27
