The cumulative market value of the output of the agricultural, industrial and service sectors within the territorial jurisdiction of a country during a specified period of time is referred to as the Gross Domestic Product (GDP). The output for the period is quantified and multiplied by market value to arrive at the GDP.
Who Calculates the GDP?
The Gross Domestic Product is calculated by the Central Statistical Office (CSO). It takes into account the Index of Industrial Production (IIP), the Wholesale Price Index (WPI) and the Consumer Price Indices. The data for these indices is in turn compiled and supplied by the Departments and Ministries of the Government of India and State Governments. CSO collates and computes the GDP.
Methodology
The market value method includes all government expenditure, consumption expenditure, net exports and investment expenditure. The market price is computed taking into account the Gross Value Added (GVA) and not factor cost (as was earlier the case). The base year for the calculation is FY 2011-12.
Significance
GDP, when compared with the data for the previous year, is a yardstick for assessing the progress made by the economy. It is also used to make future projections based on which policy prescriptions are formulated. The data provides the per capita income, purchasing power and the relative position of the economy in a global perspective.
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Consumption,Government purchases and investment do get included in calculating GDP,which are well included in this article.As far as the Net Exports of a country are concerned, there still lies a great possibility of due revenues as they are liable to massive changes even in a shorter period owing to several expenditures on defense equipment, agricultural schemes and the like.GDP is a greta tool to let anybody know how a country is doing economically.
It’s interesting that even though a country may have large GDP, the people living in that country can still be in a bad situation. This is true for China, which has a huge GDP but the majority of people living in poverty. Things like minimum wage laws and occupational health and safety can go a long way to contributing positively to GDP.