Estimates of Gross Domestic Product (GDP), Net Domestic Product (NDP) and National Income, measured as Net National Income (NNI) at current prices and GDP growth rate at constant prices (at base year 2011-12) during last three years are as under:
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What is GDP?
GDP (as per output method) = Real GDP (GDP at constant prices) - Taxes + Subsidies.
2. Expenditure Method: This measures the total expenditure incurred by all entities on goods and services within the domestic boundaries of a country.
Where, C: Consumption expenditure, I: Investment expenditure, G: Government spending and (X-IM): Exports minus imports, that is, net exports.
3. Income Method: It measures the total income earned by the factors of production, that is, labour and capital within the domestic boundaries of a country. GDP (as per income method) = GDP at factor cost + Taxes - Subsidies.
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What is GDP?
Definition: GDP is the final value of the goods and services produced within the geographic boundaries of a country during a specified period of time, normally a year. GDP growth rate is an important indicator of the economic performance of a country.
How to calculate GDP:
It can be measured by three methods, namely,
1. Output Method: This measures the monetary or market value of all the goods and services produced within the borders of the country. In order to avoid a distorted measure of GDP due to price level changes, GDP at constant prices o real GDP is computed.
1. Output Method: This measures the monetary or market value of all the goods and services produced within the borders of the country. In order to avoid a distorted measure of GDP due to price level changes, GDP at constant prices o real GDP is computed.
GDP (as per output method) = Real GDP (GDP at constant prices) - Taxes + Subsidies.
2. Expenditure Method: This measures the total expenditure incurred by all entities on goods and services within the domestic boundaries of a country.
GDP (as per expenditure method) = C + I + G + (X-IM)
Where, C: Consumption expenditure, I: Investment expenditure, G: Government spending and (X-IM): Exports minus imports, that is, net exports.
3. Income Method: It measures the total income earned by the factors of production, that is, labour and capital within the domestic boundaries of a country. GDP (as per income method) = GDP at factor cost + Taxes - Subsidies.
In India, GDP is measured as market prices and the base year for computation is 2011-12. GDP at market prices = GDP at factor cost + Indirect Taxes - Subsidies
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