What is India’s GDP and why should I care?
As we discussed in our previous post, the reason you should care about India’s GDP is because it is a good way to get a quick, one-number estimate about how “well” India is doing. This post is about answering the first part of the question posed above: what is India’s GDP?
First things first: that’s an incorrect question. What people really mean when they ask that question is: what is India’s GDP growth rate. That last phrase is often missing, which is what can (and often does) cause confusion.
GDP is what you, I and literally millions of Indians produced in one time period. GDP growth rate is how much more did we produce this year, relative to last year. When we say that the Indian economy grew at 7.5% last year, we mean we produced 7.5% more of goods and services this year when compared to last year.
Why is that a good thing? Well, producing more stuff usually means selling more stuff. Selling more stuff means more of us earned more this year compared to last year – and since when was that a bad thing, huh?
Also, producing more stuff implies requiring more people to produce said stuff, which means (probably) more people were employed this year compared to last year. And that’s also a good thing, right?
So: a higher number for our GDP growth rate means richer Indians, and more jobs all round. That’s why economists, policy makers and the media watch the GDP number so closely – its because this number tells us whether India is getting richer over time, and gives us a rough idea about whether more Indians are with jobs this year compared to the previous year.
Where should you go to check out India’s GDP growth rate? Well, there are many sources out there, but the safest is go to the source: the Ministry of Statistics and Programme Implementation. (Fun challenge: spend the next five minutes coming up with a name that bores you more than this one did)
On the home page, under a column titled “Latest News”, look for a banner heading that runs along the lines of “Provisional Estimates of Annual/Quarterly Estimates of GDP”. Clicking on that link opens up a PDF, in which the growth rates of GDP will be given.
Be careful! You should look for the GDP growth rates in constant prices, not current ones. In a later post, we’ll explain what the difference between the two is, but for now, do note that its constant prices that matter, not current.
As you can see in the table to the right, we grew at about 7.6% for the period 1st April to 31st March 2016.
And that’s a (very!) quick introduction to GDP. We’ve hopefully managed to convince you of the need to know a country’s GDP growth rate, and where to find it in India’s case. In posts to come, we’ll talk much more about GDP. For now, we’ll do a follow-up post on our Facebook page about links relevant to this topic that you might want to check out. Let us know what you think by dropping us a note in the comments below!