GDP - Gross Domestic Product
Gross Domestic Product (GDP) is the final value of all Goods and Services produced by a country in a particular period. GDP is widely used to measure any Country's economic growth.
A GDP always measures the value of all goods and services at their Market Prices and not at Cost Prices.GDP takes into consideration the value of all finished goods and services. It never counts on the intermediary uses of goods and services.
For example, a car manufacturer uses many intermediary products in the car, however only the final value of the car will be taken for GDP calculation. Anything produced within India is taken for GDP whether produced by and Indian Company or not.
India has adopted gross value added (GVA)-based approach as compared to a volume-based calculation previously.
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Old Method |
New Method |
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Data Source |
Index of Industrial Production(IIP) |
MCA 21 (Corporate Affairs Ministry) |
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Basis |
Only Volume |
Volume and Value |
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Companies Considered |
Only Firms registered under Factories Act |
Data from a wide range of Companies |
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Ancillary activities |
Not considered |
Value additions from activities like marketing are Considered |
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Labour |
All labour treated as equal |
Different weights based for different levels |
Terms and Definitions
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Term |
Definition |
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Fiscal Consolidation |
policies undertaken by Governments to reduce their deficits and accumulation of debt stock. Key deficits of government are the revenue deficit and the fiscal deficit |
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Revenue Deficit |
Revenue Receipts fall short of Revenue expenditure of the Government. Receipts which neither create asset nor reduce any liability are called Revenue Receipts. Revenue Receipts are further classified into tax revenue and non-tax revenue. Revenue Expenditure is the maintenance expenditure which the government makes towards the assets which it owns in order to keep them functioning. |
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Fiscal Deficit |
The amount by which the government’s total budget outlays exceeds its total receipts for a fiscal year. Formula=Revenue receipts- Expenditure including capital expenditure |
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Recapitalisation |
Recapitalization is the restructuring of a company's debt and equity ratio. The purpose of recapitalization is to stabilize a company's capital structure. |
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FII |
The term is used most commonly in India and refers to outside companies investing in the financial markets of India. |
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FDI |
The key feature of foreign direct investment is that it establishes either effective control of, or at least substantial influence over, the decision-making of a foreign business. |
Fund Allocation in the budget for some welfare schemes
The overall size (amount government proposes to spend) of Budget 2019-20 is estimated to be Rs. 27,86,349 crore, which is 13 per cent more than the budget presented last year.
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Scheme |
Allocation |
Purpose |
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MGNREGA |
60000 crores |
It aims to enhance livelihood security in rural areas by providing at least 100 days of wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work |
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Pradhan Mantri KisanSamman Nidhi |
75000 Crores |
Minimum Income Support for Small farmers |
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PM Awaz Yojana |
25853 crores |
Initiative in which affordable housing will be provided to Urban and Rural Poor |
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National Livelihood Mission |
9024 crores |
promoting self-employment and organization of rural poor |
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PM Gram Sadak Yojana |
19000 Crores |
provide good all-weather road connectivity to unconnected villages |
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Shyama Prasad Mukherjee Rurban Mission |
800 Crores |
to deliver integrated project based infrastructure in the rural areas, which will also include development of economic activities and skill development |
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SamagraShikhya Abhiyan |
36322 Crores |
equal opportunities for schooling and equitable learning outcomes. It subsumes the three Schemes of Sarva Shiksha Abhiyan (SSA), Rashtriya Madhyamik Shiksha Abhiyan (RMSA) and Teacher Education (TE) |
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Mid Day Meal Programme |
11000 Crores |
supplies free nutritional lunches on working days for children in primary and upper primary classes in government, government aided, local body, Education Guarantee Scheme, and alternate innovative education centres, Madarsa and Maqtabs supported under Sarva Shiksha Abhiyan, and National Child Labour Project schools run by the ministry of labour |
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PM Employment Generation Scheme |
2327.10 Crores |
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ASPIRE Scheme |
50 Crores |
promoting innovation in rural entrepreneurship |
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National Health Mission |
33651 Crores |
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Swachh Bharat Mission |
12644 Crores |
Steps taken by government for Fiscal Consolidation:
• Minimizing tax avoidance by increased digital transactions, Bank penetration in villages and small towns, Audit trail for all transactions, war on black money, introduction of GST
• Better management of government subsidies and ensuring they reach the target audience through Direct Benefit Transfer Scheme
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