BES174_P4_GDP_Growth_Rate_Demonetization_Impact.pptx - GDP...

Meani
ng
Methods to Calculate:
3 book methods, 2 real
methods of CSO
Demonetiz
ation:
Effect?
GDP: Gross Domestic
Product
Current
price
Constan
t price
GDP
deflator
Growth
Rate
GNP NNP

Gross Domestic Product (GDP) सकल घरेलू उतपाद (2016)
GDP is the Market value
of
All final goods & services
Produced within a
country
For a given time period .
$68
million
Jaguar: 50k cars
mfg.
Exploration:
Rs.701 cr.
Rs.40 cr
(2016)
++ Wages,
Profit,
Interest,
Dividend
++
Profit
--
Remittan
ce
++ Remittance, gift, donation
Rs.100 cr
(2014)

Final Private Consumption (C)
•
Not intermediate goods like steel,
rubber-> only final product (desi Nano
+ imported Ferrari also counted )
•
Existing House -> “rent” to yourself.
•
New House purchase: No.
Investment (I)
•
New House , building, capital
goods/asset.
•
Intermediate goods for future
production.
•
Capital from Share, Bond, Debenture
– used in above activities
GDP calculation method #1=
खरा
र
, the
Expenditure
Because if something is ‘produced’, then
someone must have spent rupees to make it or buy it

GDP calculation method #1: Consumption (C)
+investment (I)
+Government “purchase”
(G)
•
Salaries, Procurement yes
•
But, scholarship, Widow pension,
Unemployment Allowance, “UBI(!)”
etc. “Transfer Payments”.. No Private
final consumption (C)
+Foreigner spending in India
(e X port-i M p)
•
+ Google paying call centre
“service”
+ Arnold Buying Desi Nano
•
-- imported Ferrari
[private final consumption-walli,
because it’s produced outside India]
Because if something is ‘produced’, then
someone must have spent rupees to make it or buy it

+Consumption
(Final)
+Investment
+Government
“Purchase”
Foreigner’s Expenditure Or
NET Export
(e X port-i M port)
GDP Calc: Expenditure method: GDP= C + I +
G + (X – M)
GDP at Current Market Price
Inflation price
adjust with
base year
(2011)
GDP
@Constant
market prices

1. Skip 2. Attempt 3. Mark n
Review
k
Q
u
e
s
ti
o
n
f
o
r
P
r
e
If Government of India starts giving
universal basic income to all of its
citizens, where will it be counted in
the Expenditure method of GDP
calculation?
A. Government Expenditure (G)
B. Private consumption (C)
C. Investment (I)
D. All of above depending on
recipient being a govt employee,
private citizen or entrepreneur.

PFCE: private final consumption Expenditure; GFCE: Government final
consumption Expenditure
GFCF: gross fixed capital formation; CIS: change in stocks…. Then
adjusted @base price (2011)
Only for
information.
Else bookish
formula “CIGXM” is
sufficient.
Will explain after a
few slides
GDP calc. Expenditure method: Book formula-> Real CSO formula?
Growth rate
over last year

Expenditure
•
C + I + G + (X – M)
•
Consumption, investment, Govt.
purchase, Net export
Production: Gross Value Added
(GVA)
•
Total Value of Sale – Cost of
intermediate goods
Income Method (WIPR0)
•
W+I+P+R
•
Wages, interest, profit, rent
GDP Calculation: THREE Methods

Rs.00
•
Wage(
W)
•
Interes
t(I)
•
Profit(P
)
•
Rent(R
)
Rs.1
lakh
•
Wage(
W)
•
Interes
t(I)
•
Profit(P
)
•
Rent(R
)
Rs.5
lakh
•
Wage(
W)
•
Interes
t(I)
•
Profit(P
)
•
Rent(R
)
Rs. 10
lakh
Final
product
GDP calculation Method #1: Expenditure (CIGXM)
Method#2: Gross Value Added (Production method)
Total Sale
Rs. 16 lakh
(-)Rs. 6 lakh
Cost of
intermediate
goods
= Rs. 10