Indian Economy-Facts on India GDP

• The Indian economy is the 12th largest in the world

• It ranks 5th pertaining to purchasing power parity (PPP) according to the latest calculation of the World
Bank
• The GDP of India in the year 2007 was US $1.09 trillion
• India is the one of the most rapidly growing economies in the world
• The growth rate of the India GDP was 9.4% per year
• Due to the huge population the per capita income in India is $964 at nominal and $4,182 at PPP

Points to remember while calculating India GDP

• Calculating India GDP has to be done cautiously pertaining to the diversity of the Indian Economy.
• There are different sectors contributing to the GDP in India such as agriculture, textile, manufacturing,
information technology, telecommunication, petroleum, etc.
• The different sectors contributing to the India GDP are classified into three segments, such as primary or
agriculture sector, secondary sector or manufacturing sector, and tertiary or service sector.
• With the introduction of the digital era, Indian economy has huge scopes in the future to become one of
the leading economies in the world.
• India has become one of the most favored destinations for outsourcing activities.
• India at present is one of the biggest exporter of highly skilled labor to different countries
• The new sectors such as pharmaceuticals, nanotechnology, biotechnology, telecommunication, aviation,
manufacturing, shipbuilding, and tourism would experience very high rate of growth

How to calculate India GDP-

The method of Calculating India GDP is the expenditure method, which is, GDP = consumption + investment +
(government spending) + (exports-imports) and the formula is GDP = C + I + G + (X-M)

Where,

• C stands for consumption which includes personal expenditures pertaining to food, households, medical
expenses, rent, etc
• I stands for business investment as capital which includes construction of a new mine, purchase of
machinery and equipment for a factory, purchase of software, expenditure on new houses, buying goods and
services but investments on financial products is not included as it falls under savings
• G stands for the total government expenditures on final goods and services which includes investment
expenditure by the government, purchase of weapons for the military, and salaries of public servants
• X stands for gross exports which includes all goods and services produced for overseas consumption
• M stands for gross imports which includes any goods or services imported for consumption and it should
be deducted to prevent from calculating foreign supply as domestic supply
Recent developments in Indian GDP

Over the past 4 quarters India Gross Domestic Product (GDP) has extended 6.10%. According to World Bank
report, India Gross Domestic Product accounts to 1217 billion dollars or 1.96% of the world economy. India
being a diverse economy incorporates customary village farming, handicrafts and wide range of
contemporary industry and services. Services are considered as a chief factor behind the economic elevation
accounting for more than half of India’s productivity. Since 1997, Indian economy has registered an average
growth rate of more than 7%, minimizing poverty rate by around 10%.

India’s GDP grew at a notable 9.2 per cent in the year 2006-2007. Now that the service sector accounts for
more than half of the GDP is a landmark in the economic history of India and helps the nation to come
closer to the basics of an industrial economy.

Where does India stand?

India is positioned as one of the major economies worldwide in terms of the purchasing power parity (PPP)
of the gross domestic product (GDP) by chief financial units of the world such as the International Monetary
Fund, the CIA and the World Bank.

In terms of agricultural output India is the second largest. Industries related to the agriculture have also
played an important role in the up gradation of the nation’s economy by opening up employment avenues in
the forestry, fishing and logging sectors.

For the elevation in the production volume in Indian agriculture various five year plans should also be given
due credit. Improvements in irrigation methods as well as usage of modern technologies have also added
value to the agriculture processes.

In terms of factory output India ranks 14th in quantity produced by industrial sector. Gas, mining, electricity
and quarrying industries also play major developmental roles and contribute in a major way to the GDP.

Latest snapshots of India Per Capita GDP

• India’s Per Capita Income stood at Rs 19040 in the year 2002-03

• In 2003-04 India Per Capita Income was Rs 20989.
• Per Capita Income in India was Rs 23241 in 2004-05.
• In the fiscal year 2008-2009 the Per Capita GDP in India was Rs 37490.
• Per Capita GDP at factor rate at regular (1999-2000) prices in the FY 2008-2009 is estimated to
reach a level of Rs 3351653.
• In 2008-2009 India attained a growth rate of 7.1 per cent.
• A collective growth rate of 2.6 per cent in the field of agriculture, forestry and fishing was witnessed
in the FY 2008-2009
• Service industry had a growth rate of 10.3 per cent in 2008-2009
• During 2008-2009 industry saw a growth rate of 3.4 per cent.

Indian States in terms of Per Capita Income

• Jharkhand and Orissa which are considered as two backward states are increasingly developing in
terms of per capita income. This expansion is facilitated by the growth of business activities taking
place in these two mineral rich states.
• Jharkhand with per capita income of Rs 14,990 has posted 16.6 per cent rise.
• Orissa is a spectator of an steady growth of 11.5 per cent in per capita income (Rs 14.795)
• The industrialized Gujarat and Karnataka and Tamil Nadu are rated among the top states with per
capita income more than Rs 20,734
 • Karnataka has per capita income nearly 9.28% followed by Gujarat and Tamil Nadu at 8.92% and
8.46% respectively.
• Delhi and Goa however has lower growth rate at 6.9 per cent and 6 per cent respectively but ranks
the highest in per capita income at Rs 49172 and Rs. 47507 respectively.
• Chhattisgarh with turbulence in social, political and economic front registered a growth of 8.8 per
cent. However, the average income base is very minimal at Rs.16,365.
• Madhya Pradesh, Uttar Pradesh and Bihar are yet to make a mark in the category of highest per
capita income as the growth measures in these states are yet to be implemented.
• At per capita income of Rs. 12566, Rs. 10637 and Rs. 6610 of Madhya Pradesh, Uttar Pradesh and
Bihar respectively, these states have the sluggish rates of 2.9 per cent, 3.1 per cent and 3.7 per
cent respectively.
• 17 states have per capita income less than the national average of 8.4%.

India’s Per Capita Income in coming years

India’s per capita income is predicted to rise in coming years. FY 2008-09 was expected to witness more
than double of per capita income over the last seven years to Rs 38,084, indicating enhancement in the
living standards of an average Indian citizen.

The highest increase in per capita income was seen during 2006-07 in terms of percentage which stood
at 13.5%. However, after reducing for inflation (at 1999-2000 rates), the per capita income is predicted
to grow to Rs25,661, indicating an upsurge of 5.6%.

In conclusion, as compared to other nations, India has performed well inspite of the global financial
meltdown.

GDP India Growth Rate

India is considered as one of the best players in the world economy in the past few decades, but rapidly
increasing inflation and the intricacies in administering the world’s biggest democracy are acting as the
major hurdle in the field of development.

Indian economy in recent years has been consistently performing with flying colors, escalating 9.2% in 2007
and 9.6% in 2006. This uninterrupted expansion is assisted by markets restructuring, huge infusions of FDI,
increasing foreign exchange reserves, boom in both IT and real estate sectors, and a thriving capital
market.

The latest reviews of the India GDP growth rate are as under -

• For the first quarter of 2007-08 GDP posted a growth of 9.3% and stood at Rs 7,23,132 crore, as
compared to the consequent quarter of previous fiscal year
• In the quarter of April-June economy of India grew at 9.3%. The progress was triggered by
construction, manufacturing, services and agriculture industries
• For the week concluded July 28, 2007, the yearly inflation rate was 4.45%
• Balance of Payments in India is predicted to remain contended
• Merchandise Exports registered steady growth
• Manufacturing posted 11.95 expansion
Difference between GDP and GDP Growth Rate

Retail spending, government expenses exports and inventory levels determine GDP growth rate. Elevation in
imports will affect GDP growth in a negative way.

Economic strength of a nation is indicated by the GDP growth rate. Development in GDP will eventually
boom business, employment opportunities and personal income. On the flip side, if GDP slows down, then
business ventures and already established enterprises will come to a halt. This will call off monetary infusion
in new purchases, tie-ups and recruiting new employees till the economy gain pace. As a result the GDP
further deteriorates because the consumers do not have sufficient money to spend on buying a product or
service.

India GDP growth rate in 2009

According to International Monetary Fund (IMF) economic growth rate of India is predicted to dip by 6.9 per
cent in the fiscal year 2009. IMF has further stated that this relegation is unavoidable because the Asian
nations are not fully impervious to the global financial crisis and its consequent negative effects.

IMF's World Economic Outlook (WEO), released in Washington on October 8, 2008, explains the slopping of
GDP growth rate in the last three years. In 2007 GDP growth rate was 9.3 per cent while in 2008 it dipped
to 7.8 per cent and would end up at 6.9 per cent in 2009.

The analysis also asserted that Asia’s economic growth rate is expected to undergo a negative transition in
the coming fiscal year. Year 2008 witnessed a 7.7 per cent decline in GDP growth rate of Asia which would
eventually end up at 7.1 per cent in 2009. Financial market worldwide underwent a severe slowdown after
the September 08 market turmoil and is becoming financially fragile day by day.

The weak financial market is incapable of attracting investors’ attention. India has also suffered a major
setback in the year 2005-07 according to IMF, when the worldwide stock markets slipped radically.