GDP

 

What is GDP ( Gross Domestic Product )

Gross Domestic Product (GDP) is used to measure the economy of any country. Gross Domestic Product hereinafter termed as GDP. GDP is the market value of all final Goods and Services produced within a country in a given period of time. In simpler terms, any economic activity which we produce and that contributes to the GDP of the country.

Goods and Services: GDP includes both tangible goods (food, clothing, properties, automobiles, etc.) and intangible services (spa, house help, health check-up). When you buy a favorite car, you are buying a good, and the purchase price is part of GDP. When you hire it and pay rent for a day or multiple days to go on a vacation, you are buying a service, and the car rent is also part of GDP.

Produced: GDP includes goods and services currently produced. It does not include the past/previous year transactions. For example, if you are manufacturing the laptops and selling them to the customers, the value of the laptops is included in GDP. When the user sells a used laptop to another person, the value of the used laptop is not included in GDP. 

World GDP -- US tops on the table with 20.89 trillion followed by China, Japan, Germany,UK and India. India is now 3.10 trillion is hoping to cross the 5 trillion economy in the coming 3 to 4 years by producing more goods and services.

The three major classifications of GDP are: 

● Agriculture, 

● Industrial 

 ● Services.

Since the beginning, agriculture is contributing a major portion to our national income. Agriculture is an important part of India's economy. Agriculture is the only means of living for almost two-thirds of the employed class in India. The agriculture sector of India has occupied almost 40 percent of India's geographical area.

Although the share of agriculture has been declining gradually with the growth of other sectors, the share still remained very high as compared to that of the developed countries of the world.

Agriculture contributes to the economy where almost 40% of the total population is dependent on this sector , out of the 3.1 trillion-dollar Indian economy, only 20% comes from agriculture. 26% comes from the industry sector and the rest 54% comes from the service sector. Though most of the people in the country depend on the Agri-sector, we are not called an agricultural economy, we are a service oriented economy.

The Services Sector constitutes a large part of the Indian economy both in terms of employment potential and its contribution to national income and it is contributing around 58% to the economy as a whole. This sector covers a wide range of activities from the most sophisticated in the field of Information and Communication Technology to simple services pursued by the informal sector workers, for example, vegetable sellers, dealers, manual workers, etc. 

The following are the constituents of the Services Sector..

● Trade,

 ● Hotel, 

● Transport, 

● Financial, 

● Public Administration, 

● Defence 

● Real Estate and 

● Other Professional Services. 

During the last few decades, it has been observed, in both developed and developing countries, that the service sector has emerged as the main driver of economic growth as compared to the primary and secondary sectors.

The dramatic growth of the services sector in India reflects rapid paces made by the educated professionals. The largest contributor to this change is the information technology enabled services and the business processing and outsourcing services. They have already hit the shores of India with a boom. 

The service sector would be the main driving factor for INDIA to become   a 5 trillion economy.

This blog is purely for educational purposes and not to be treated as personal advice. Mutual funds are subject to market risks, read all scheme-related documents carefully.

Raja Bhattacharjee

https://www.investmentjunctions.com/