How is GDP calculated in India?

Answer 1

Indian GDP is calculated by Expenditure method which is as follows:

GDP = consumption + investment + (government spending) + (exports-imports) and the formula is GDP = C + I + G + (X-M)

Where:

• C - stands for consumption which includes personal expenditures pertaining to food, households, medical expenses, rent, etc
• I - stands for business investment as capital which includes construction of a new mine, purchase of machinery and equipment for a factory, purchase of software, expenditure on new houses, buying goods and services but investments on financial products is not included as it falls under savings
• G- stands for the total government expenditures on final goods and services which includes investment expenditure by the government, purchase of weapons for the military, and salaries of public servants
• X - stands for gross exports which includes all goods and services produced for overseas consumption
• M - stands for gross imports which includes any goods or services imported for consumption and it should be deducted to prevent from calculating foreign supply as domestic supply

Surendra