GDP - Is modification required?

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Anubhav Bansal (Querist)
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27 July 2009 Recently I was going through the article in one of the magazine which had little bit details of the growth rate of GDP for the year 2008-09 and also annexed were the growth rate of the sectors considered as prime growth drivers of the GDP. While analysing the same I came across certain questions which I wanted to bring it to you people for a confabulation.

Before I put in my analysis (very short one as compared to that of the subject) I request my seniors and experts on this site to correct me if I am wrong.

My analysis--- I find GDP for the year 2008-09 is recorded at 6.7% which is 26% below the GDP growth rate for the year 07-08 which was recorded at 9%. (Growth rates are as on 31/3/09). But at the same time the two of the major growth drivers of the GDP, 1.Agriculture and allied sector (A&AS). 2.Industrial production (IP), both saw a fall rate of above 65% for the current year i.e. the two were recorded at 1.6% and 2.6% for the year 2008-09 as compared to 4.9% and 8.5% for the year 2007-08 respectively.

Now points which confused me and which I need to understand are-

1. How seriously are the above two sectors A&AS and IP are considered as growth drivers?

2. If even after a record fall of over 65% in these two prime sectors GDP can stand with a 26% fall, then how strongly is GDP influenced by these 2 sectors?

3. If these 2 so called prime sectors are really not contributing to the growth of GDP then what is the need of bringing something special for these two sectors every now and then?

Frankly speaking I have not done much homework befor putting up this blog, so you people please, if you can, then do guide me over my observation. I cant find a better way to conclude, do we really need a modification in measuring methods and parameters of our economic growth?

CA CS CIMA Prakash Somani

CA CS CIMA Prakash Somani (Expert)
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28 July 2009 1. India has major agricultural income in its GDP so these two fectors are righly considard.

2. GDP calculation has many other factors too. I also want to know how it has been calculated but i could not find all factors which are considard for its calculation,, let me know if you come to know.

3. "You can not leave your parents because they are ill " what if they are not contributing today. in future they can play a imressive part in taking GDP up ... :)

Keep asking these Q's really it increses analytical power :)