Gross domestic product (GDP) is the single standard indicator used across the globe to indicate the health of a nation's economy: one single number that represents the monetary value of all the finished goods and services produced within a country's borders in a specific period. Gross domestic product may be&nꦐbsp;easy to define but it is complex to calculate, and different countries employ different methods.

This article d🗹iscusses how Indi🐭a calculates its GDP.

India's Data Collection Process

The Central Statistics Office under the Ministry of Statistics and Program Implementation is responsible for 澳洲幸运5官方开奖结果体彩网:macroeconomic data gathering and statistical record keeping. Its processes involve conducting an annual survey of industries and a compilation of various indexes such as the 澳洲幸运5官方开奖结果体彩网:Industrial Production Index (IPI) and the 澳洲幸运5官方开奖结果体彩网:Consumer Price Index (CPI).

The Central Statistics Office coordinates with various federal and state government agencies and departments to collect and compile the data required to calculate the GDP and other statistics. For example, data points specific to manufacturing, 澳洲幸运5官方开奖结果体彩网:crop yields, or commodities—which are used for the 澳洲幸运5官方开奖结果体彩网:Wholesale Price Index (WPI) and CPI calculations—are gathered and calibrated by the Price Monitoring Cell in the Department of Consumer Affairs under the Ministry of Consumer Affairs.

Similarly, production-related data used for calculating IPI is sourced from the Department of Industrial Policy and Promotion under the Ministry of Commerce and Industry.

All th📖✱e required data points are collected and aggregated at the Central Statistics Office and used to arrive at GDP numbers.

India's GDP Calculation Process

The GDP in India is calculated using two different methods, leading to different figures that ar꧟e nonetheless close in range.

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 澳洲幸运5官方开奖结果体彩网:nominal GDP (using the current market price) and real GDP (꧑inflation-adjusted). Among the four released numbers, the GDP at factor cost is the most commonly followed figure and reported i📖n the media.

The Factor Cost Figure

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:

1. Agriculture, forestry, and fishing
2. Mining and quarrying
3. Manufacturing
4. Electricity, gas, water supply, and other utility services
5. Construction
6. Trade, hotels, transport, communication, and broadcasting
7. Financial, real estate, and professional services
8. Public administration, defense, and other services

Here is an edited sample report showing an overall GDP change of 6.9%, with a similar percentage change across different industry sectors. For example, mining and quarrying declined by 2.9%, while financing, insurance, real estate, and business serviceꩵs saw a rise of 10.5%.

Using these numbers, it is easy to see the current state of the economy and its differ𝔍ent subsectors. Investors can make informed business and investment decisions and the government can impleme🌳nt policies accordingly.

The Expenditure Figure

The expenditure (at market prices) method involves summing the domestic expenditure on final goods and services across various streams during a particular time period. It includes consideration of expenses towards household consumption, 澳洲幸运5官方开奖结果体彩网:net investments (i.e., capital formation), government costs, and net trade (exports minus imports).

The GDP numbers from the two methods may not match precise🎉ly, but they are close. The expenditure approach offe𓆉rs good insight into which parts contribute most to the Indian economy.

For example, domestic household consumption, which forms 60.34% of the economy, is the reason why India remains unaffected to a good extent by economic slowdowns in other parts of the world.

Any economℱy with a high concentration onꦯ exports will be more susceptible to the effects of global recessions.

Timelines for India's GDP

Each quarter’s data are released with a lag of two months from the last working day of the quarter. Annual GDP data is released on May 31, with a lag of two months. (The financial year in India follows an April-to-March schedule.) The first figures released are quarterly estimates. As more and more accurate data sets become available, the calculated figures are revised to final numbers.

No one knows precisely why India's fiscal year runs from April 1 to March 31. Most likely, it's a holdover from the centuries of British rule (the U.K. also follows an April-to-March schedule). As it happens, April 1 marks Chaitra Sukhladi, the beginning of the Hindu New Year, so the date already has a special meaning for many Indians.

Less romantically, many crops are harvested in February and March. Agriculture remains a significant componentꦇ of the Indian economy. Starting the new year in April allows time to estimate the income from crop yields.

The Bottom Line

India calculates GDP in two different ways. Both methods have advantages for the end-user, depending upon their needs. To assess the performance of different industry sectors, the factor cost GDP details are useful. Expenditure-based GDP calculations indicate how different areas of the economy arꦿe performing; whether the trade is improving, or whe🍬ther investments are on the decline.