GDP means the total output of any country.
The entire production that is done in the field of agriculture, industry, and services is called the GDP of that country i.e. Gross Domestic Product.
If you mix the products and services produced in a country in 1 year and price it according to the market, then it is called the GDP of that country’s economy.
For example, let’s say that only one product is made in India and that is a pen,
if 10 pens worth Rs 20 are made in a year, then the GDP of India is Rs 200.
In other words we can say that GDP means complete production of a country for 1 year.
With the help of GDP, we can easily measure the economy and progress of the country.
The GDP of a country shows its economic condition, that is why it is also called growth rate.
History of GDP
GDP calculation started in the US in 1934 when American economist Simon Kuznets presented the National Income Report 1929 to 1934 in the American Parliament.
For the first time in this report, he has included the product of every production and service in the country.
In India too, the economy is measured on the basis of GDP since 1950.
How is GDP calculated?
A standard formula has been prepared to calculate GDP, which is considered by most of the countries of the world today, and accordingly calculate the GDP of their country.
GDP = C + I + G + (X – M)
Here C stands for Consumption (all private consumer spending within the national economy)
Here I mean the sum of the country’s investments
Here G stands for – Total Government Expenditure
Here X means the total exports of the country
Here M stands for the total import of the country
or in other words, we can use this formula
GDP = Total Private Consumption + Total Gross Investment + Total Government Investment + Total Government Expenditure + (Exports – Imports). Please note that the nominal value changes due to changes in quantity and price.
When the GDP calculation of any country is done, apart from agriculture, industry, and service, the biggest impact is that how much goods are imported or exported in that country.
For example, if we buy any goods in India, which are made in China, then the price of those goods will be added to the GDP calculation of China, and it will have a negative impact on the GDP calculation of India.
India’s GDP is calculated once every 3 months . and it is seen that what is the current GDP as compared to the previous quarter.
India is one of the fastest-growing economies in the world, with a very good GDP
The current GDP of India is close to two lakh crore rupees, which is more than 2% of the total GDP of the world.
India’s GDP growth has been close to five percent in 2019-20
The responsibility of measuring GDP in India rests with the Central Statistics Office ( CSO ) under the Ministry of Static and Program Implementation.
Drawbacks of GDP Calculation
Many economists believe that there are many shortcomings in the GDP calculation of India and many other countries, which need to be removed, some of the shortcomings are as follows-
- The model of GDP calculation that is adopted at present does not calculate black money.
- If a company makes a profit by moving to another country, then its income is not added to GDP.
- In GDP calculation, only the economic aspects are taken into account, the social status or living conditions of the people are not given any importance.
- Children’s health and quality of education are also not included in GDP calculation.