Imagine adding up the value of everything made and sold in India in a year: the biscuits, the phone repairs, the software, the farm produce, the haircuts. That total is the gross domestic product, or GDP. It is the most common scoreboard for the size of an economy.
Nominal and real
Nominal GDP is measured at the prices of the day. If prices rise 5%, nominal GDP can grow even if nobody produced anything extra. Real GDP removes the effect of price changes, so it shows how much more (or less) was actually produced. When news says "GDP grew 7%", it usually means real GDP growth.
Who measures it, and when
India's National Statistics Office publishes GDP estimates every quarter, and for the full financial year (April to March). The first numbers are estimates and are often revised later.
What it is made of
- Private consumption: what households spend.
- Investment: what businesses and the government spend on factories, roads and machines.
- Government spending: salaries, services and projects.
- Net exports: what we sell abroad minus what we buy from abroad.
How to read the headline
A growth number compares a period with the same period a year before, unless it says otherwise. Growth of 7% means the economy is 7% bigger than a year ago, in real terms. Rising from a low base can make growth look high, just as with company profits.
What GDP does not show
GDP is an average. It does not show how income is shared, what happens to jobs, or prices in your city. A fast-growing economy does not guarantee that a particular share's price will rise, and a slow quarter does not mean it will fall.
Per-person GDP (GDP divided by population) is a better way to compare countries of different sizes.