Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. GDP is a broad measurement of a nation’s overall economic activity.
Though GDP is usually calculated on an annual basis, it can be calculated on a quarterly basis as well.
GDP includes all private and public consumption, government outlays, investments, private inventories, paid-in construction costs and the foreign balance of trade (exports are added, imports are subtracted).
GDP is commonly used as an indicator of the economic health of a country, as well as a gauge of a country's standard of living.
GDP can be used to compare the productivity of various countries with a high degree of accuracy.
A nation’s GDP from any period can be measured as a percentage relative to previous periods.
An important statistic that indicates whether an economy is expanding or contracting, GDP can be tracked over long spans of time and used in measuring a nation’s economic growth or decline, as well as in determining if an economy is in recession (generally defined as two consecutive quarters of negative GDP growth).
Providing a quantitative figure for GDP helps a government make decisions such as whether to stimulate a stagnant economy by pumping money into it or, conversely, to slow down an economy that's getting over-heated.
Businesses can also use GDP as a guide to decide how best to expand or contract their production and other business activities.
And investors also watch GDP since it provides a framework for investment decision-making. The "corporate profits" and "inventory" data in the GDP report are a great resource for equity investors, as both categories show total growth during the period; corporate profits data also displays pre-tax profits, operating cash flows and breakdowns for all major sectors of the economy.
The Central Statistics Office (CSO), under the Ministry of Statistics and Program Implementation, is responsible for macroeconomic data gathering and statistical record keeping.
The CSO collects and compiles the data required to calculate the GDP and other statistics.
The GDP in India is calculated using two different methods,
The first method is based on economic activity (at factor cost),
and the second is based on expenditure (at market prices).
Further calculations are made to arrive at nominal GDP (using current market price) and real GDP (inflation-adjusted).
The factor cost figure is calculated by collecting data for the net change in value for each sector during a particular time period. The following eight industry sectors are considered in this cost:
Agriculture, forestry, and fishing;
Mining and quarrying;
Electricity, gas and water supply;
Trade, hotels, transport and communication;
Financing, insurance, real estate and business services;
Community, social and personal services.
Index of Industrial Production
The Index of Industrial Production (IIP) is an index for India which details out the growth of various sectors in an economy such as mineral mining, electricity and manufacturing.
The all India IIP is a composite indicator that measures the short-term changes in the volume of production of a basket of industrial products during a given period with respect to that in a chosen base period.
It is compiled and published monthly by the central statistical organization (CSO), Ministry of Statistics and Program Implementation six weeks after the reference month ends.
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