Economic Environment of Business

Term Paper Presentation

on

GDP –its equation, how to raise GDP in India?.

Presented By:

Navneet Vijaywargi(131207)

A.Avinash(131248)

K.Anusha(131249)

Ch. Aditya(131209)

K.Anusha(131208)

Gross domestic product (GDP) is the market value of

all officially recognized final goods and services

produced within a country in a given period of time.

It does not include the incomes of NRI’s.

In simple terms GDP is the national income of a

country in a given period of time.

Gross Domestic Product (GDP)

Measurement of GDP:

Expenditure approach:

The following is the approach to arrive at the GDP:

◦ Take consumption expenditure in various goods and

services-(C)

◦ Add investments by people in various avenues such as

equity, Fixed Deposits etc.-(I)

◦ Add government expenditure in infrastructure

development, defense etc.-(G)

◦ Add the excess of exports over imports.-(X-M)

The resultant figure is the GDP of the country.

Measurement of GDP (contd.)

Income approach/ Factor income method:

In this method, incomes such as business profits, salaries, rent, corporate profits, taxes, interest etc. are added to arrive at the National GDP.

Value added approach:In this method the value added to a particular product at every stage of its production is added to arrive at the value added to that product.

Then the value added by all the firms in an economy is added to arrive at the GDP.

Methods of calculating GDP (contd.)

Nominal GDP: It measures the value of all commodities/services in an economy at current prices.

Real GDP: It measures the value of all commodities/services in an economy at constant prices of some base year.

Real GDP=Nominal GDP/GDP Deflator.

GP Deflator=GDP at current prices/GDP at constant prices.

Equation of GDP:

• The equation of GDP is:

GDP = C + I + G + (X-M)

where,

• Consumption (C) - Includes personal consumption

goods.

• Investment (I) - Includes Gross Private Investments

such as Fixed Deposits etc.

Equation of GDP (contd.) :

Government Purchases (G) - This category

includes government spending various items.

Net Exports (X-M)- This is calculated by

subtracting a nations imports (M)from exports

(X).

Methods to increase GDP:

Increase Private Public Partnership in sectors

like mining, transport, power etc.

Infrastructure development to attract FDI in

India.

Provide funding and subsidies to startups

companies.

Encourage research activities by educational

institutions.

Maintain balance between exports and imports.

Methods to increase GDP (contd.)

Govt. should frame transparent policies for

doing business in India.

Govt. should create more jobs.

Import of non-essential goods must be reduced.

Create awareness among people about

investment options available to them.

Encourage MSME sectors by granting low

interest loans.

CONCLUSION:

By implementing the above mentioned

measures the GDP in India can be

improved to a major extent.