The article is all about the very important Economic Indicator : Gross Domestic Product (GDP). Till now we use to hear about the sayings GDP growth is increased or decreased, because of which the economy is booming or going down etc. Have anyone went into deep and try to know how the GDP is calculated, who will release the figure and when the GDP rate will released etc.? I think very least common man will bother about these things. Do not worry, keeping in mind the persons who have neglected such things, this article have covered some basic things in easy to read ways. Read and get knowledge on GDP.

What is GDP?

GDP is the abbreviation of Gross Domestic Product. GDP is the very important economic indicator. GDP data will be released in the form of rate by which it is increased or decreased from the previous release. If the GDP rate increased as expected then it is good for the specific country economy. The GDP rate will be released for sector to sector, like real estate, Automobile Manufacturing, FMCG etc. Depending on the net GDP rate the whole economy will dip or boom. By this time you would come to a rough idea what a GDP rate means.

When the GDP will be calculated and released?

In common all such data are calculated quarterly and released. Quarterly means the financial year quarter. But the GDP rate release at the financial year end will give an impact on economy. While releasing the GDP rate, we can get the planned growth for the next year. Normally, in a sector, if the real GDP growth increased the expected (previous year planned), then we can expect the specific sector in the Boom.

Who will calculate and release the GDP rate?

The GDP growth will be calculated by the Economists in Central Statistics Office CSO, New Delhi. As the GDP rate depends on the economy part, economists are the right person to calculate it. This rate when go in deep, we can easily find out which state contributes more for the GDP growth in sector wise. Now we have 29 states (As on June,1 2014), to get the complete GDP rate. CSO is responsible for all such kind of data to be calculated and released every quarter. It will also announce, if any changes in the data released already.

How GDP will be calculated?

GDP can be calculated by two major ways. One is expenditure method and other one is Income method. The first one will be calculated by the expenditures made by the country in the current period and the later one will be calculated by the income for the country in the current period. The GDP rate by the above two methods should be the same, because the Income = Expenditure. The expenditure method includes Expenditure, Investments, Government Spending and Net exports. The income method includes Income, Profits and Taxes.

  • Income or Expenditure of an Individual
  • Profit or Investment of Corporates
  • Taxes or Spendings of Government
  • Please let me know if you are not clear with the above two methods.

    Why the GDP is important?

    As already said, GDP is the Very important Economy Indicator. Economy involves money and hence the GDP growth will directly affect the currency growth of the country. The growth rate varies from sector to sector and also the changes next year also varies. The contribution from each sector affects the net GDP growth rate of a country.

    Where the GDP importance is seen?

    GDP growth rate determines the Economy of the country and also decides whether the country is developed or developing country. India consists of 29 states and each state will contribute for the country GDP rate. So a country can be a developed one only if all the states contribute much for the counties GDP rate. GDP rate of the country also determines the stock’s value in the specific sector. How it will affect? If the GDP rate in the specific sector shows high then it will be attracted by the foreign investors and the share price will go up.
    Click on the below link to know the exact GDP rate for every county
    Data from World Bank