Print Friendly, PDF & Email

How is the Gross Domestic Product (GDP) calculated in India? Examine the limitations pertaining to GDP as an economic performance measurement framework of the country.

Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

5. How is the Gross Domestic Product (GDP) calculated in India? Examine the limitations pertaining to GDP as an economic performance measurement framework of the country. (250 words)

Difficulty level: Moderate.

Reference: The Hindu

Why the question:

The National Statistical Office’s latest release of GDP data estimates a further deceleration in growth in the October-December 2022 quarter, a slowdown that the government’s Chief Economic Adviser (CEA) has attributed largely to an upward revision in the year-earlier period’s figures.

 Key Demand of the question: 

To write about GDP, its limitations in highlighting the nature of India’s economy.

Directive word: 

Examine – When asked to ‘Examine’, we must investigate the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications.

Structure of the answer:

Introduction: 

Begin by defining GDP.

Body:

First, write about various ways GDP is calculated in India – income method, expenditure method and production(output) method.

Next, write about limitations of GDP – leaves out some production in an economy. Even though GDP is frequently used to capture the wellbeing of a society, it was never intended to do that, and as a result, it leaves out important aspects of well-being like pollution or even happiness.

Next. Mention the new measurements which are needed for economic performance measurement and framework.

Conclusion:

Conclude by writing a way forward.