Skip to main content

How is GDP calculated in India?

We often come across the news headlines about rise or fall in GDP, commonly referred to as growth rate of a country. But what is GDP and how is it calculated?

What is Gross Domestic Product (GDP)?

Gross Domestic Product (GDP) is the value of all final goods and services produced in the domestic territory of a country during a financial year. 

How is GDP calculated?

GDP is measured at –

  1. Constant prices (at prices of base year 2011-12) also known as Real GDP
  2. Current prices also known as Nominal GDP

When growth rate of a country is talked about, it refers to rise or fall in GDP (at constant prices).

GDP can be calculated using following methods –

  1. Income / production / supply-side components
  2. Expenditure components

GDP calculation using income / production / supply-side components

GDP = GVA at basic prices (+) Net taxes on products

Gross Value Added (GVA) at basic prices

Gross Value Added (GVA) measures the difference between the value of the final goods and the cost of ingredients used in its production, net of taxes and subsidies. Basic price is the amount receivable by the producer (seller) from the buyer for a unit of a good or service produced after deducting taxes payable and adding the subsidy receivable on that unit.

GVA at basic prices = CE (+) OS/MI (+) CFC (+) Production taxes (-) Production subsidies 

Where, 

  • CE – Compensation of Employees
  • OS / MI – Operating Surplus / Mixed Income – difference between revenue and expenditure of corporates / non-corporates enterprises
  • CFC – Consumption of Fixed Capital i.e. Depreciation
  • Production taxes or subsidies are paid or received with relation to production and are independent of the volume of actual production. Examples of production taxes are land revenues, stamps, and registration fees. Examples of production subsidies are subsidies to railways, subsidies to village and small industries.

GVA of following sectors is taken into account for calculation of GDP–

  1. Agriculture, Forestry & Fishing
  2. Mining & Quarrying
  3. Manufacturing
  4. Electricity, Gas, Water Supply & Other Utility Services 
  5. Construction 
  6. Trade, Hotels, Transport, Communication & Services related to Broadcasting 
  7. Financial, Real Estate & Professional Services 
  8. Public Administration, Defence & Other Services

Net taxes on products

Net taxes on product = product taxes (-) product subsidies

Product taxes or subsidies are paid or received on per unit of product. Examples of product taxes are excise tax, service tax, import duty, etc. Examples of product subsidies are food, petroleum, and fertilizer subsidies; interest subsidies given to farmers, households, etc.

GDP calculation using expenditure components

GDP = Private Final Consumption Expenditure (PFCE) + Government Final Consumption Expenditure (GFCE) + Gross Fixed Capital Formation (GFCF) + Change in Stocks (CIS) + Valuables + Net Exports (i.e. Exports minus Imports) + Discrepancies

What is Nominal and Real GDP / GVA?

  • Nominal GDP / GVA = GDP / GVA at current prices
  • Real GDP / GVA = GDP / GVA at constant prices = GDP / GVA after adjusting for inflation

Domestic Product

  • Gross Domestic Product (GDP) = GVA at basic prices (+) Net taxes on products
  • Net Domestic Product (NDP) = GDP (-) Depreciation

National Income

  • Gross National Income (GNI) = GDP (+) Net primary income from abroad (receipts minus payments)
  • Net National Income (NNI) = GNI (-) Depreciation
  • Net National Income (NNI) = NDP (+) Net primary income from abroad (receipts minus payments)
  • Primary Incomes = Compensation of Employees (+) Property and Entrepreneurial Income

National Disposable Income

  • Gross National Disposable Income (GNDI) = GNI (+) other net current transfers from abroad (receipts minus payments)
  • Net National Disposable Income (NNDI) = GNI (-) Depreciation
  • Net National Disposable Income (NNDI) = NNI (+) other net current transfers from abroad (receipts minus payments)
  • Other Current Transfers refers to current transfers other than the primary incomes.

Who publishes GDP and national income data? 

National Statistical Office (NSO), Ministry of Statistics and Programme Implementation, Government of India, releases the Provisional Estimates (PE) of National Income as well as Quarterly Estimates of GDP, along with the corresponding estimates of expenditure components of GDP both at Constant (2011-12) and Current Prices in accordance with the release calendar of National Accounts.

Follow at - Telegram   Instagram   LinkedIn   Twitter

Labels:

Comments

Post a Comment

Popular Posts

Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) (Updated as on September 11, 2026)

Reserve Bank of India (RBI) has issued the directions on maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) by banks. To whom are the directions applicable? The directions are applicable to the following Regulated Entities (REs) – Commercial Banks  Small Finance Banks (SFBs) Payments Banks (PBs) Local Area Banks (LABs) Regional Rural Banks (RRBs) Primary (Urban) Co-operative Banks (UCBs) Rural Co-operative Banks – State Co-operative Banks (StCBs) District Central Co-operative Banks (DCCBs) What is CRR? Every bank shall maintain in India by way of cash reserve, a sum equivalent to such percent of its Net Demand and Time Liabilities (NDTL) in India, as the RBI in terms of Section 42(1) of the RBI Act, 1934 (for scheduled banks) and Section 18(1) of the Banking Regulation Act (BR Act), 1949 (for non-scheduled banks) [including provisions of Section 18(1) of the BR Act as applicable to co-operative banks], may specify. What is incremental CRR? In terms of Secti...
Post a Comment
Read more

Framework for Self-Regulatory Organisations in the FinTech Sector (Updated on September 10, 2026)

Reserve Bank of India (RBI) has released the framework for self-regulatory organisations in the FinTech sector. What are FinTechs? For the purpose of membership of an Self-Regulatory Organisations for FinTech Sector (SRO-FT), FinTechs may be defined as entities that provide technological solutions for delivery of financial products and services to businesses and consumers or encompass regulatory and supervisory compliance in partnership with traditional financial institutions or otherwise.  What is the need of Self-Regulatory Organisations for FinTech Sector? FinTechs play a pivotal role in redefining financial services by saving time, enhancing access, and lowering costs. While the FinTechs bring various innovations, the FinTech sector also raises concerns relating to customer protection, data privacy, cyber security, grievance handling, internal governance, financial system integrity, etc. A judicious balance between maximising the creative potential of FinTechs, while minimising...
Post a Comment
Read more

Credit Facilities to Scheduled Castes (SCs) & Scheduled Tribes (STs)

Reserve Bank of India (RBI) has issued guidelines on credit facilities to Scheduled Castes (SCs) & Scheduled Tribes (STs). What are the guidelines on credit facilities to SCs & STs? District Level Consultative Committees formed under the Lead Bank Scheme should continue to be the principal mechanism of co-ordination between banks and development agencies.  National Scheduled Tribes Finance & Development Corporation and National Scheduled Castes Finance & Development Corporation have been set up under the administrative control of Ministry of Tribal Affairs and Ministry of Social Justice & Empowerment, respectively. Banks should advise their branches / controlling offices to render all the necessary institutional support to enable these institutions to achieve the desired objectives. Loans sanctioned to State Sponsored Organisations for Scheduled Castes / Scheduled Tribes for the specific purpose of purchase and supply of inputs and / or the marketing of the out...
Post a Comment
Read more

What is Ways and Means Advances (WMA)? (Updated as on September 25, 2026)

Reserve Bank of India (RBI) has recently announced the Ways and Means Advances (WMA) limit for the Government of India. So, what is WMA? What is Ways and Means Advances (WMA)? Ways and Means Advances (WMA) is a collateral free clean advance availed by the Central and State Governments from RBI, to tide over temporary mismatches in the receipts and payments. Section 17(5) of the Reserve Bank of India Act, 1934 empowers RBI to grant WMA to Central and State Governments, as and when required by them. What is Special WMA / Special Drawing Facility (SDF)? In addition to WMA, State Governments are also eligible for a Special Drawing Facility (SDF), which is granted against collateral of Government Securities held by the State Governments.  SDF availed by State Governments / UTs is linked to the quantum of their investments in marketable securities issued by the Government of India, including Auction Treasury Bills (ATBs).  (Updated as on June 28, 2024) Based on the recommendations m...
Post a Comment
Read more

Credit Derivatives (Updated as on September 22, 2026)

Reserve Bank of India (RBI) has issued directions on credit derivatives. What is Credit Derivative? Credit derivative means a derivative contract whose value is derived from the credit risk of an underlying debt instrument or an index of underlying debt instruments. What is Credit Default Swap (CDS) and Total Return Swap (TRS)? Credit Default Swap (CDS) means a credit derivative contract in which one counterparty (protection seller) commits to pay to the other counterparty (protection buyer) in the case of a credit event with respect to a reference entity and in return, the protection buyer makes periodic payments (premium) to the protection seller until the maturity of the contract or the credit event, whichever is earlier. Total Return Swap (TRS) means a credit derivative contract under which one counterparty (total return payer) commits to transfer the entire economic performance of a reference asset to the other counterparty (total return receiver), and, in return, receives a pre-d...
Post a Comment
Read more