What is GDP?
GDP, Gross Domestic Product, is a primary indicator used to assess the strength of a country’s economy representing the total value of all the goods and services produced over a particular time frame. Normally, GDP is articulated as an evaluation to the preceding quarter or fiscal. It helps the foreign investors to assess the safety of their investments, popularly known as FDI – Foreign Direct Investments in overseas countries and may either fix caps in dealing or may safely stay from investing. It has a great bearing on the value of the overseas countries’ currency value vis-à-vis its own currency to determine the value of business likely to be obtained while dealing with other countries.
While calculating GDP is convoluted, though the economists find it easy to do so, it can be determined in either of the two methods – either by summing up the earnings of people in a year or by summing up the spending of everyone with the former called income approach while the latter termed as expenditure approach. Theoretically, both the procedures should reach roughly at the same total.
GDP and Indian Economy
The Indian economy is the eleventh largest among other countries in the world by insignificant GDP besides being the third largest in terms of purchasing power parity (PPP). India’s Gross Domestic Product (GDP) accounted for 5.3 percent expansion in the first quarter of 2012 vis-à-vis the same quarter of the previous fiscal. India accounted for the highest growth rates during the mid-2000s, and is one among the many global fastest-growing economies principally due to a gigantic boost in the magnitude of the middle class consumer, an outsized workers’ force and sizeable foreign direct as well as indirect investments.
Indian Industry Sector and GDP
The GDP of Industry and Services accounted for 28% deploying around 14% of the entire labour force. The industries’ sector experienced noteworthy changes consequent to economic reforms of ’91 which liberalized imports, enabling overseas competition resulting in privatization of Government owned industries besides allowing foreign direct investments administration, superior infrastructure which all resulted in growth of FMCG [fast moving consumer goods]. However, the Indian private industries had to bear the brunt of increasing competition, both from home country besides overseas.
The Indian Textile Industry is the second largest employment source next to agriculture accounting for about 20% of production output with over 20 million people working. The revolution of the textile industry from a demeaning to rapidly emergent industry has been a biggest achievement for the entire nation. After freeing the industry off a numerous limitations in 2004–2005, particularly financial, the government accorded clearance to enormous flow of both home and overseas investments. By 2012, this figure is likely to touch 38 billion and create an additional employment scope to more than 17 million people though the demand for Indian textiles in the global markets keep on depleting.
Service Industry – Information Technology and Business Process Outsourcing
Services sector accounted for largest share in GDP and the growth is attributed to enhanced expertise coupled with availability of low cost, highly educated and competent English speaking work force matching with enhanced demand from overseas for Indian services exports and those exploring to outsource their operations.
Retail Industry accounts for 15% growth and is yet another pillar in Indian economy with Indian retail market poised to be US$460 billion with being one among the top five global retail markets in terms of economic value.