INDIAN GDP ANALYSIS

2001-2010

NAME – 1. Gargi Parkhe

2. Manas Natekar
CLASS –SYBA (2020-21)
DIVISION – B
ROLL NO. – 2346 & 2345
SUBJECT – Macroeconomics

SEMESTER –III
TITLE – Indian GDP Analysis (2001-2010)
DEPT. – DEPARTMENT OF ECONOMICS
EMAIL ID – [email protected]
[email protected]
CONTACT – 9969069637
9767218320 1
 INDEX

Sr No. Particulars Page No

1 Literature Review 1

2 What is GDP? Ways of Computing GDP 2

3 GDP Analysis’s from year the 2001-2010 3-15

4 Conclusion 16

5 Bibliography 17

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 LITERATURE REVIEW

 As the topic of the project is predominantly theoretical, a thorough literature review was a logical way to
conduct a majority of the project. The sources for the literature review were mainly journal articles and
different reports on the topic. There has been a lot of research done on this particular field of research,
probably because the topic is interesting to several different areas of science, from economics to
statistics.
 The sources for the literature review were mainly selected by searching from various government
databases and data available on the Internet, To produce a systematic analysis, several different
articles have been examined and only the most relevant have been selected

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 What is GDP?

 Gross Domestic Product (GDP) is the monetary value of all finished goods and services made within a
country during a specific period.
 GDP provides an economic snapshot of a country, used to estimate the size of an economy and growth
rate.
 GDP can be calculated in three ways, using expenditures, production, or incomes. It can be adjusted
for inflation and population to provide deeper insights.
 Though it has limitations, GDP is a key tool to guide policymakers, investors, and businesses in
strategic decision making.
 In addition, there are several popular variations of GDP measurements which can be useful for
different purposes:

 Nominal GDP: GDP evaluated at current market prices, in either the local currency or in U.S. dollars at
currency market exchanges rates in order to compare countries' GDP in purely financial terms.
 Purchasing Power Parity (PPP): GDP measured in "international dollars" using the method of
Purchasing Power Parity (PPP), which adjusts for differences in local prices and costs of living in order
to make cross-country comparisons of real output, real income, and living standards.
 Real GDP: Real GDP is an inflation-adjusted measure that reflects the quantity of goods and services
produced by an economy in a given year, with prices held constant from year to year in order to
separate out the impact of inflation or deflation from the trend in output over time.
 GDP Growth Rate: The GDP growth rate compares one year (or quarter) of a country's GDP to the
previous year (or quarter) in order to measure how fast an economy is growing. Usually expressed as a
percent rate, this measure is popular for economic policy makers because GDP growth is thought to be
closely connected to key policy targets such as inflation and unemployment rates.
 GDP Per Capita: GDP per capita is a measurement of the GDP per person in a country's population. It
indicates the amount of output or income per person in an economy can indicate average productivity
or average living standards. GDP per capita can be stated in nominal, real (inflation adjusted), or PPP
terms.

Three Ways of Computing GDP

 The Expenditure Approach

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 The expenditure approach, also known as the spending approach, calculates spending by the different
groups that participate in the economy. The U.S. GDP is primarily measured based on the expenditure
approach. This approach can be calculated using the following formula: GDP = C + G + I + NX (where
C=consumption; G=government spending; I=Investment; and NX=net exports). All these activities
contribute to the GDP of a country.

 The Production (Output) Approach

The production approach is essentially the reverse of the expenditure approach. Instead of measuring
the input costs that contribute to economic activity, the production approach estimates the total value of
economic output and deducts the cost of intermediate goods that are consumed in the process (like
those of materials and services)

 The Income Approach

The income approach represents a kind of middle ground between the two other approaches to
calculating GDP. The income approach calculates the income earned by all the factors of production in
an economy, including the wages paid to labor, the rent earned by land, the return on capital in the form
of interest, and corporate profits.

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 GROSS DOMESTIC PRODUCT- 2001

Agriculture:

 The total production of food grain was 212 million tonnes in 2001- 2002

 The Agricultural Sector in India GDP grew at the rate of 1.7%

Steel & Cement:

 Steel output grew by 19.8 percent in 2001-02.

FDI:

 Foreign Direct Investment (FDI) inflows in 2002 rose to Rs.19,265 crore.

Service Industry:

 The Services sector registered a growth of 7.6 percent.

 GDP was estimated to grow by 6.8 percent in 2001-02

Textile:

 The textiles sector contributed about 3% to the GDP.

 India earned about 27% of its total foreign exchange through textile exports.

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 GROSS DOMESTIC PRODUCT - 2002

Agriculture:

 The decline in that year's projected food grain production to 183.2 million tonnes compared to the
previous year's output of 212 million tonnes, (13.6 percent fall) was large. Fortunately, though, the
accumulated public stock of food grains provided a cushion to compensate for this shortfall, the most
important effect of which was the absence of an inflationary undercurrent among primary product
prices.

Industry:

 IIP growth of 5.3 percent in April-November 2002-03.

 The two key elements which led this growth were capital goods, which grew by 9.9 percent, and
consumer non-durables, which had growth of 12.7 percent.

Textile:

 Textile products showed a strong growth of 14.8 percent in April-November 2002.

 A key element of this growth was an increase of 11.6 percent in exports of readymade garments in
terms of the dollar

Steel & Cement:

 Steel output grew by 24.5 percent in April-November 2002.

 In 2002-03, cement production grew strongly by 9.5 percent.

FDI:

 Foreign Direct Investment inflows in 2002 rose to Rs.21,286 crore.

Service Industry:

 The services sector registered a growth of 7.6 percent.

 GDP was estimated to grow by 7.1 percent in 2002-03.

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 GROSS DOMESTIC PRODUCT - 2003

Agriculture

 India was one of the world’s largest food producers (600 million tonnes).
 World’s largest producer of milk, sugarcane and tea.
 Second largest exporter of rice, wheat, fruits, and vegetables. India produces 30 million tonnes of fruits
and 59 million tons of vegetables.
 Food grain production was expected to be around 220 million tons in 2003-4. The buffer stock of food
grains stood at 23 million tons in September 2004.

Information Technology

 India’s IT market reached a turnover of US$ 20.4 billion in 2003-04. The IT Sector employs 650,000
people and this was likely to reach 2 million by 2014. IT Companies were expected to account for 8-
10% of GDP by 2008 from 1.4% in 2001.
 Turnover of the top three companies namely Tata Consultancies, Infosys and WIPRO, were over one
billion dollars each in 2004.
 Ports and terminals were being modernized and services are privatized.
 The “Sagar Mala” project in August 2003 for expansion and modernization of ports, inland navigation
and maritime transport.

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 GROSS DOMESTIC PRODUCT - 2004

 In 2003-04 India Per Capita Income was Rs 20989.

 Per Capita Income in India was Rs 23241 in 2004-05.

 The economic growth for 2004-05 was revised upwards to 7.5 per cent as against the earlier estimate
of 6.9 per cent.

 The slowdown in GDP growth during 2004-05 was largely due to a sharp decline in agriculture. The
farm sector grew by only 0.7 per cent during the year as compared to 10 per cent in 2003-04.

 Trade and hotels sector registered a growth of 8.1 per cent compared to 10.2 per cent.

 Communication and transport sector grew by 14.8 per cent compared to 15.2 per cent.

 Financing, insurance, real estate and business services was up by 9.2 per cent from 4.5 per cent.

 Community and social services also grew by 9.2 per cent during 2004-05 compared to 5.4 per cent in
2003-04.

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 GROSS DOMESTIC PRODUCT – 2005

 Below were the contributions of different sectors in the India's GDP for 2005

Agriculture: - 20%
Service Sector: - 54%
Industry: - 26%
 The government announced that India's gross domestic product stood revised up to 9% (from the
previous estimates of 8.4 per cent) against 7.5 per cent.
 According to official figures, the growth rate of 9 per cent in GDP during 2005-06 was achieved due to
high growth in agriculture, forestry and fishing, manufacturing, insurance, construction, financing, real
estate and business services and transport.

GROSS DOMESTIC PRODUCT – 2006

 The Gross domestic capital formation in 2005-06 grew by 23.7%.

 FDI amounted to US$12.5 billion and outpaced portfolio investment of US$6.8 billion.
 Central Public Sector Enterprises to invest Rs.165, 053 crore in 2007-08.
 New 162 production sharing contracts awarded to Petroleum and Natural Gas sector SMEs witnessed
steady increase in outstanding credit.
 Foreign trade and merchandise exports expected to cross US$125 billion by the end of the fiscal.
Provision for tourist infrastructure increased to Rs.423 crore.
 Bank's differential rate of interest scheme provided finance at the rate of 4% to weaker sections. The
regional rural banks to open at least one branch in 80 uncovered districts in 2007-08.
 Permanent Account Number (PAN) made sole identification number for all participants of capital
market.
 Seven ultra-mega power projects were under process. Provision for NHDP to be increased to Rs.9,945
crore.
 Farm credit target of Rs.2,25,000 crore was allotted for the financial year 2007-08 with an addition of 50
lakh new farmers to the banking system.

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 GROSS DOMESTIC PRODUCT – 2007

The GDP India 2007 represented different important economic parameters like inflation, purchasing power
parity, bank credit, foreign direct investment, excise duty etc. Further, the GDP India 2007 includes
performance of the critical industries like manufacturing, agriculture, infrastructure, banking and insurance etc.

Agriculture:

 During 3-year period, acceleration in growth rate in manufacturing went from 8.7% to 9.1% and then to
11.3% and growth rate in services sector went from 9.6% to 9.8% and further to 11.2%.

 Achieved a growth of 4% in the agriculture sector.

Banking Sector:

 Growth in bank credit, year on year, by 29.6%; expansion in M3 by 21.3%, foreign exchange reserves
at US$ 180 billion.

Allocation:

 Allocations for major sectors, like increase in provision for Bharat Nirman by 31.6% from Rs.18, 696
crores to Rs.24, 603 crores, for education by 34.2% to Rs.32, 352 crores and for health and family
welfare by 21.9% to Rs.15, 291 crores.

 Faster growth involving each and every Indian industry and sector.

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 GROSS DOMESTIC PRODUCT – 2008

The deceleration of growth in the December 2007 quarter of 9.7% was mainly due to the slower growth
recorded by the interest rate sensitive sectors – real estate and consumer durables, also the supply problems
in a few sectors. The consumption expenditure continued to grow at a healthy rate. And, the income tax cuts
and waivers of loans for farmers bestowed by the Finance Minister in the Union Budget 2008–09 were going to
increase the spending power in the hands of the Indian consumer (urban and rural) further. Rising
consumption expenditure and continuation of the capex boom in that period implied that growth momentum
was sustained.

Agriculture:

 The growth rate of agriculture was at 4 %.

 The food sector was expected to grow to $310 billion by 2015.

 Stocks of food-grains were to grow by 14% or more.

Infrastructure:

 Construction industry growth rate was expected to be more than 11%.

 Provision for tourist infrastructure was to be increased to Rs.423 crore.

 Corpus of Rural Infrastructure Development Fund to be raised.

 Provision for NHDP was to be increased to Rs.9, 945 crores.

Industry:

 India's Industrial growth rate exceeded 10%.

 Manufacturing industry recorded growth rate of 12% and above.

 The mining and quarrying sector registered a growth of 4% and above.

 Telecommunication sector registered a growth of more than 1000%.

 Electricity sector registered 12% plus growth.

 Corporate India to record rise in salaries by 25%.

 Exports to grow by 19% and the imports by 35% and above.

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Banking sector:

 Bank's differential rate of interest scheme to provide finance at the rate of 4% to weaker sections.

 RRBs to open at least one branch in 80 uncovered districts.

 Exclusive health insurance scheme for senior citizens.

 Farm credit target of Rs. 2,25,000 crore has been set with an addition of 50 lakh new farmers to the
banking system.

 Loan facilitation through Agricultural Insurance and NABARD had also been facilitated.

 Growth in bank credit to grow by 30%.

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 GROSS DOMESTIC PRODUCT – 2009

 The growth rate of Indian GDP fell from 7.35% in 2008-09 to 5.36% till the end of 3rd quarter of the
2009-10.

 The cumulative FDI Equity inflows (from August 1991 – August 2009) stood at Rs.5,20,589 crore.

 Budgetary support for NHDP has gone by 23% on y-o-y basis for 2009-10.

 Expenses for the CWG 2010, went up from Rs.2,112 crore in Interim Budget to Rs.3,472 crore for
2009-10 fiscal.

 Allocation to railways had gone up from Rs.10,800 crore in interim budget to Rs.15,800 crore for FY
2009-10.

 Allocation under NRHM had gone up by Rs.2,057 crore over interim budget estimate in 2009-10 of
Rs.12,070 crore.

 Rs.2,113 crore was allocated for IITs and NITs, comprising of a provision of Rs.450 crore for new
upcoming IITs and NITs.

 Minimum Alternate Tax (MAT) to go up to 15% from 10%.

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 GROSS DOMESTIC PRODUCT – 2010

 The growth rate has been 8.6 % in 2010-11 and is expected to be around 9 % in the next fiscal year.

Agriculture:

 With a relatively good monsoon the agriculture-sector was expected to grow at 5.4 %.

 The food grain production went up to 232.1 billion tonnes from 218.1 billion tonnes.

Savings:

 Rise in savings and investments and pick up in private consumption had resulted in 9.7 % growth of
GDP at market prices (constant).

 Savings rate had gone up to 33.7 % while the investment rate is up to 36.5 % of GDP.

Industry:

 The Survey reported that the industrial output growth rate was 8.6 % while the manufacturing sector
registered a growth rate of 9.1 % in 2010-11.

 The telecommunications sector has done exceedingly well as the tele-density has increased to 143.95
% in 2010 in urban areas while in the rural areas it has gone up to 30.18 % in 2010.

 Exports in April-December 2010 went up by 29.5 % while the imports registered a growth rate of 19 %.

Banking sector:

 The inclusive growth agenda of the Government is reflected in the 59 % rise in Net Bank Credit.

 The expenditure on Social sector programs has been stepped up by 5 % point of GDP over the past
five years.

 The specific schemes for Scheduled Castes, Tribes, OBCs and the regions such as North-East,
expansion of NREGA, Sarva Shiksha Abhiyan, NRHM, in terms of coverage as well as the spending
and monitoring have found specific mention in the report.

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 CONCLUSION

 The GDP is one of the most used indicators of economic activity or demand. Gross Domestic Product (
GDP) GDP is a reliable measure of economic size and perhaps the best indicator of economic growth
is the GDP growth rate.
 GDP makes it possible for policy-makers and central banks to determine whether the economy
contracts or expands, and to take the appropriate steps promptly.
 It may also examine the implications of factors like monetary and fiscal policy, economic shocks and
taxation and expenditure plans by policy makers, economists and companies.
 GDP is not always optimal and does not always take into consideration a variety of important factors.

GDP
12.00%
9.66% 9.89%
10.00% 9.17%
8.11%
GDP percent

8.00% 6.80% 7.10% 6.85% 6.40%

5.68%
6.00%

4.00%
GDP
2.00%

0.00%

Years

 The above graph represents the GDP percentages in different years from 2001 to 2010. As we can see
India began the 21st century with a good 6.8% growth rate. The GDP growth rate was fairly good until
2004. 2005 was the year when the GDP crossed the 8% mark and for the next 3 years i.e. until 2008,
India just kept breaking its own records. After 2008, the GDP fell sharply to 6.4% and then further fell to
5.68% in 2010.

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 Bibliography

 www.moneycontrol.com
 www.rawfiles.com
 www.tradingeconomics.com
 www.wikipedia.org

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