Gdp Advance Estimate

8/3/2019 Gdp Advance Estimate

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GDP.. Real Indicator

& ADVANCEESTIMATE


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OBJECTIVE

The advance GDP estimates arereleased before the end of afinancial year to enable the

government to formulate variousestimates for inclusion in theBudget.


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From Wikipedia, the

free encyclopediaUnion budget of IndiaThe Union Budget of India, referred to as the

annual Financial Statement[1] in Article 112 of the

Constitution of India, is the annual budget of theRepublic of India, presented each year on the lastworking day of February by theFinance Minister of India in Parliament. The budgethas to be passed by the House before it can comeinto effect on April 1, the start of India'sfinancial year. Former Finance Minister MorarjiDesai presented the budget eight times, the mostby any.[2]
http://en.wikipedia.org/wiki/Union_budget_of_Indiahttp://en.wikipedia.org/wiki/Constitution_of_Indiahttp://en.wikipedia.org/wiki/Republic_of_Indiahttp://en.wikipedia.org/wiki/Finance_Minister_of_Indiahttp://en.wikipedia.org/wiki/Parliament_of_Indiahttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Financial_yearhttp://en.wikipedia.org/wiki/Morarji_Desaihttp://en.wikipedia.org/wiki/Morarji_Desaihttp://en.wikipedia.org/wiki/Union_budget_of_Indiahttp://en.wikipedia.org/wiki/Union_budget_of_Indiahttp://en.wikipedia.org/wiki/Morarji_Desaihttp://en.wikipedia.org/wiki/Morarji_Desaihttp://en.wikipedia.org/wiki/Financial_yearhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Parliament_of_Indiahttp://en.wikipedia.org/wiki/Finance_Minister_of_Indiahttp://en.wikipedia.org/wiki/Republic_of_Indiahttp://en.wikipedia.org/wiki/Constitution_of_Indiahttp://en.wikipedia.org/wiki/Union_budget_of_India


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DETERMINING GDP

GDP can be be determined in three ways, all of which should,in principle, give the same result. They are the product (oroutput) approach, the income approach, and the expenditureapproach.

The most direct of the three is the product approach, which

sums the outputs of every class of enterprise to arrive at thetotal. The expenditure approach works on the principle thatall of the product must be bought by somebody, thereforethe value of the total product must be equal to people's totalexpenditures in buying things. The income approach workson the principle that the incomes of the productive factors

("producers," colloquially) must be equal to the value of theirproduct, and determines GDP by finding the sum of allproducers' incomes.[5]

Example: the expenditure method:

GDP = private consumption + gross investment +government spending + (exports imports), or
http://en.wikipedia.org/wiki/Gross_domestic_producthttp://en.wikipedia.org/wiki/Gross_domestic_product


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PRODUCTION APPROACH

CALCULATE " Market value of all final goods and services calculated during1 year . "

The production approach is also called as Net Product or Valueadded method. This method consists of three stages:--

1. Estimating the Gross Value of domestic Output in various economicactivities;

2. Determining the intermediate consumption, i.e., the cost of material,

supplies and services used to produce final goods or services; andfinally

3. Deducting intermediate consumption from Gross Value to obtain theNet Value of Domestic Output.

. Symbolically,

. Gross Value Added = Value of output Value of Intermediate Consumption.

. Value of Output = Value of the total sales of goods and services + Value ofchanges in the inventories.

.The sum of Gross Value Added in various economic activities is known asGDP at factor cost.

. GDP at factor cost plus indirect taxes less subsidies on products is GDP atProducer Price.


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Production approach

For measuring gross output of domestic product, economicactivities (i.e. industries) are classified into various sectors.

After classifying economic activities, the gross output of eachsector is calculated by any of the following two methods:--

1. By multiplying the output of each sector by their respectivemarket price and adding them together and

2. By collecting data on gross sales and inventories from therecords of companies and adding them together.

Subtracting each sector's intermediate consumption from grossoutput, we get sectoral Gross Value Added (GVA) at factorcost.

1. We, then add gross value of all sectors to get GDP atfactor cost. Adding indirect tax less subsidies in GDP atfactor cost, we get GDP at Producer Prices.


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GDP Highlights

The economic growth is likely to fall to athree-year low of 6.9% in FY12, mainly dueto sharp slowdown in manufacturing,agriculture and mining sectors, against

8.4% expansion in the last fiscal.

The CSO's GDP growth projection is a tad

lower than the 7% forecast made by theReserve Bank of India in its quarterlymonetary policy review last month.


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AGRICULTURE SECTOR

Agriculture and allied activitiesare likely to grow at 2.5% inFY12, compared to a robustgrowth of 7% in FY11, accordingto the Advanced Estimatesreleased today by the CentralStatistical Organisation (CSO).


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MANUFACTURING

Manufacturing growth is alsoexpected to drop down to 3.9% inthis fiscal from 7.6% last year.


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More on GDP Estimates

In its mid-year Economic Review, the governmenthad also pegged growth at around 7.5%. Thecurrent estimate is a sharply lower than the 9%growth projection for FY12 made by the

government in its pre-Budget survey in Februarylast year.

The latest GDP growth estimate of 6.9% for the

entire fiscal means that the pace of economicexpansion slowed in the second half of FY12, giventhat GDP growth in the April-September, 2011,period stood at 7.3%.


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Mining & Quarry

According to the advance estimates,mining and quarrying is likely towitness a decline of 2.2%, comparedto a growth of 5% a year ago.


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REAL ESTATE & BFSI

Growth in construction is alsolikely to slip to 4.8% in FY12,against an 8% in FY11.

Furthermore, the finance,insurance, real estate andbusiness services sectors arelikely to grow by 9.1% this fiscal,against 10.4% last fiscal.


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ENERGY & POWER

According to the data, growth inelectricity, gas and water productionis, however, likely to be better thisyear. The segments are expected to

grow up by 8.3% in FY12, against 3%in FY11.


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HOTEL, TRADE & TRANSPORT

During the current fiscal, the trade, hotel,transport and communication sectors areprojected to grow by 11.2%, against11.1% last fiscal.

Community social and personal services

are pegged to witness a growth of 5.9%,compared to 4.5% in the year-ago period.


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Concluding GDP Estimate

The government and the RBI had earlier said thatglobal economic slowdown and the high domesticinterest rate regime is likely to act as a dampenerin this fiscal's growth. However, the 6.9% growth

projected in the advanced estimates is lower thanwhat experts have been forecasting.

The Indian economy had expanded by 8.4% in bothFY11 and FY10, while growth in FY09 was 6.7%.


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Nominal GDP, Real GDP, and PriceLevel

Nominal GDP is GDP evaluated at current market

prices. Therefore, nominal GDP will include all of thechanges in market prices that have occurred duringthe current year due to inflation or deflation.Inflation is defined as a rise in the overall price level,and deflation is defined as a fall in the overall price

level. In order to abstract from changes in the overallprice level, another measure of GDP called real GDPis often used.

Real GDP is GDP evaluated at the market prices ofsome base year. For example, if 1990 were chosen asthe base year, then real GDP for 1995 is calculatedby taking the quantities of all goods and servicespurchased in 1995 and multiplying them by their1990 prices.


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GDP DEFLATOR

GDP deflator. Using the statistics on real GDPand nominal GDP, one can calculate an implicitindex of the price level for the year. This indexis called the GDP deflator and is given by the

formula.

The GDP deflator can be viewed as a conversionfactor that transforms real GDP into nominalGDP. Note that in the base year, real GDP is bydefinition equal to nominal GDP so that the GDPdeflator in the base year is always equal to 100.


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Rate of inflation or

deflation. Calculating the rate of inflation or deflation. Supposethat in the year following the base year, the GDP deflatoris equal to 110. The percentage change in the GDPdeflator from the previous (base) year is obtained usingthe same formula used to calculate the growth rate of

GDP. This percentage change is found to be

implying that the GDP deflator index has increased 10%.Another way of describing this finding would be to say thatthe inflation rate in the year following the base year was10%.


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CONSUMER PRICE INDEX

The GDP deflator is not the only index measure of theprice level. Among the many other price indices, theconsumer price index (CPI) is the most frequentlycited. The CPI differs from the GDP deflator in twoimportant ways. First, the CPI measures only the

change in the prices of a basket of goods consumedby a typical household. Second, the CPI uses baseyear quantities rather than current year quantities incalculating the price level index value. The formula forthe CPI is given as


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THANKS

Documents

Gdp Advance Estimate