Context
India`s GDP rose significantly in the second quarter of the fiscal year 2021-22 growing at 8.4 percent.
What is GDP?
- GDP marks overall production within the boundary of the country and shows the growth of the country by covering the production growth of almost every sector.
- It is defined as the total monetary or market value of all finished or final goods and services produced within a country at a given time.
- It provides deeper insights into the inflation level of the country.
- It can be calculated on basis of the Income method, expenditure method, and production method.
- Based on calculation it is classified into two types such as;
- Nominal GDP- GDP at market price is termed as nominal GDP calculated as per the market price for the year. It is not been adjusted for inflation.
- Real GDP- GDP calculated at base year price referred to as real GDP, adjusted for inflation to reflect changes in real output. The current base year price for GDP is 2011-12.
- GDP at factor cost = GDP at market price - net indirect taxes. It shows the total production growth of the country.
GDP v/s GVA
Gross value added(GVA) is the total value of all goods and services produced in an economy within the boundary of the country It is being calculated as
GVA = GDP at market price + Product subsidies - Taxes on product
