JAIPURIA INSTITUTE OF MANAGEMENT

LUCKNOW

ASSIGNMENT ON INDIAS GDP DATA FOR 2009-10

SUBMITTED BY ASHUTOSH KUMAR SRIVASTAVA SHARMA (JIML-10-032) SEC-A

SUBMITTED TO DR.MAHIMA

Gross domestic product (GDP) The market value of all final goods and services produced in a country in a year. It is often positively correlated with the standard of living. Measuring GDP:-GDP can be measured in three ways1-Capital (output) methodThe most direct method, which sums the outputs of every class of enterprise to arrive at the total. Market values of goods and services = output prices 2-Income methodThe income method works on the principle that the incomes of the productive factors must be equal to the value of their product, and determines GDP by finding the sum of all producers' incomes GDP =Employees wages/salaries +non-corporate income + corporate profits +net interest +rental income. 3-Expenditure methodThe expenditure method works on the principle that all of the product must be bought by somebody, therefore the value of the total product must be equal to people's total expenditures in buying things. GDP =Private consumption +gross investment +government purchases (spending) +net exports (exports- imports) GDP =C +I +G + NX (X-M)

Adjustments to GDP:When comparing GDP figures from one year to another, it is desirable to compensate for changes in the value of moneyinflation or deflation. The raw GDP figure as given by the equations above is called the nominal, or historical, or current, GDP. To make it more meaningful for year-to-year comparisons, it may be multiplied by the ratio between the value of money in the year the GDP was measured and the value of money in some base year. For example, suppose a country's GDP in 1990 was $100 million and its GDP in 2000 was $300 million; but suppose that inflation had halved the value of its currency over that period. To meaningfully compare its 2000 GDP to its 1990 GDP we could multiply the 2000 GDP by one-half, to make it relative to 1990 as a base year. The result would be that the 2000 GDP equals $300 million x one-half = $150 million, in 1990 monetary terms. We would see that the country's GDP had, realistically, increased 1.5 times over that period, not 3 times, as it might appear from the raw GDP data. The GDP adjusted for changes in money-value in this way is called the real, or constant, GDP.

GDP deflator The factor used to convert GDP from current to constant values in this way is called the GDP deflator. Unlike the Consumer price index, which measures inflation (or deflation) in the price of household consumer goods, the GDP deflator measures changes in the prices all domestically produced goods and services in an economyincluding investment goods and government services, as well as household consumption goods

GDP DEFLATOR =.NOMINAL GDP/REAL GDP 100 Constant-GDP figures allow us to calculate a GDP growth rate, which tells us how much a country's production has increased (or decreased, if the growth rate is negative) compared to the previous year.

Real GDP growth rate for year n = [(Real GDP in year n) - (Real GDP in year n - 1)]/ (Real GDP in year n 1)

INDIAS GDP DATA

GDP AT FACTOR COST 2004-05 7.5 % 2005-069.5 % 2006-079.7 % 2007-089.0 % 2008-096.7 % 2009-107.4 %

QUARTERLY ESTIMATES OF GDP FOR 2009-10 AT FACTOR COST (AT CONSTANT PRICES) (BASE 2004-05)

ANALYSIS OF GDP AT CONSTANT (2004-05) PRICES

India registered an impressive growth of 7.4 % during 200910 despite the crisis facing the global economy in past few years. It is also clear from data that economic growth decelerated in 2009-10 to 7.4 %, which represented a decline of 1.0 % from the average growth rate of 8.4 % in the previous 5 years (2004-05 to 2008-09). GDP at factor cost at constant (2004-05) prices in the year 2009-10 is now estimated as Rs. 44,64,081 crore showing a growth rate of 7.4 per cent over the Quick Estimates of GDP for the year 2008-09 of Rs. 41,54,973 crore on 31th may, 2010.

. The sectors which showed growth rates of 5 per cent or more, are mining and quarrying (10.6 per cent), manufacturing (10.8 per cent), electricity, gas and water supply(6.5 per cent) construction (6.5 per cent), 'trade, hotels, transport and communication' (9.3 percent), 'financing, insurance, real estate and business services' (9.7 per cent), and 'community, social and personal services' (5.6 per cent).The agriculture, forestry and fishing sector ,however registered a growth rate of 0.2 per cent.

QUARTERLY GROWTH ( %) ANALYSIS OF GDP

The four quarters of a financial year are denoted by Q1, Q2, Q3 and Q4. In the first quarter of 2009-10, the growth fell to 6.0 % (compared to7.8 % in Q1 of 2008-09) .In the second, third and fourth quarters of 2009-10,the growth in GDP was 8.6 %,6.5 % and 8.6 % respectively(compared to 7.5%,6.1% and 5.8% in Q2,Q3 and Q4 of 2008-09).

FIRST QUARTER The first quarter witnessed a sharp fall in the growth of construction,trade, hotels, transport and communication and sharp increase in mining and quarrying. SECOND QUARTER The second quarter witnessed a sharp fall in the growth of agriculture forestry and fishing (turned into negative growth) and construction while sharp increase in the growth of mining and quarrying, manufacturing and electric gas & water supply. THIRD QUARTER The third quarter witnessed a sharp fall in the growth of agriculture (negative growth) and community, social & personal services and sharp increase in growth of mining & quarrying, manufacturing ,construction and trade, hotels, transport & communication.

FOURTH QUARTER

The sectors which registered significant growth rates in Q4 of 2009-10 over Q4 of 2008-09 are mining and quarrying at 14.0 %, manufacturing at 16.3 %, electricity, gas and water supply at 7.1 %, construction at 8.7 %, 'trade, hotels, transport and communication' at 12.4 per %, and the sector which registered sharp fall in the growth were financing, insurance, real estate and business services' at 7.9 % (as compared to 12.3 % in 2008-09) and community,social &personal services at 1.6 % (as compared to 8.8 % in 200809). GDP at factor cost at constant (2004-05) prices in Q4 of 2009-10 is estimated at Rs. 12,05,119 crore, as against Rs. 11,10,041 crore in Q4 of 2008-09, showing a growth rate of 8.6 per cent .

CONCLUSION

Agriculture sector showed decline in growth in all the 4 quarter (registered only 0.2 % growth in 2009-10) which is matter of concern for us. Mining and quarrying sector showed increase in growth in all the 4 quarter thus registered second highest growth of 10.6 % in 2009-10(as compared to 1.6% of 2008-09). Manufacturing sector showed fall in growth in first quarter due to the deepening impact of the global crisis and a slow down to domestic demand and increased in sharp growth from the second quarter, registered highest growth in 200910 of 10.8 % (as compared to 3.2% of 2008-09). In India, Bihar became fastest growth state due to boom in manufacturing sector. Electricity, gas & water supply, Construction, Trade, hotels, transport & communication showed increase in growth from the quarter third.

 Community, social & personal services showed sharp fall in growth from third quarter. Financing, insurance, real estate & bus,services showed decline in growth from third quarter.

The GDP growth rate of India is mainly on account of higher performance in mining and quarrying and manufacturing and trade, hotel, transport &communication in 2009-10.

SECTORAL SHARE OF INDIAS GDP IN 2009-10

agriculture and fishing, 14.60%

services industry agriculture and fishing

industry, 28%

services, 57.20%

Highest contribution in GDP from service sector followed by Industry.

RECENT DATA ON GDP

INDIA GDP SURGES 8.9% IN THE THIRD QUARTER Year 2010 2009 2008 Mar 8.60 5.80 8.50 Jun 8.90 6.00 7.80 Sep 8.90 8.60 7.50 Dec 6.50 6.10

India's domestically-powered economy grew more than expected in the September quarter, defying weakness elsewhere and putting pressure on the Reserve Bank of India (RBI) to tighten monetary policy although a rate increase next month still looks unlikely. Annual gross domestic product grew 8.9 percent in the September quarter -- matching the revised figure for the previous quarter.

The services sector, which accounts for over 50 percent of GDP, grew 9.8 percent in the September quarter, higher than 9.3 percent in the previous quarter. Consumer price inflation eased to an annual 9.7 percent in October from 9.82 percent the previous month. Wholesale price inflation, which is more closely watched as it covers a higher number of products, eased to 8.58 percent in October from 8.62 percent a month earlier. Signs of easing inflation, a fragile global economy and weaker industrial output in September were likely to forestall any rise in rates in the near-term, some analysts

said. "Unless the full year growth looks likely to cross 9 percent, the central bank is unlikely to get aggressive again in raising rates," said Anjali Varma, economist at MF Global in Mumbai. Industrial output growth -- a key indicator of momentum -- in Asia's third-largest economy unexpectedly in September to 4.4 percent from earlier, down from the previous month's upwardly 6.92 percent growth. growth slowed a year revised