Gross Domestic Product
• It is a measure of total
monetary value of all
final goods and
services produced
within a country’s
domestic territory over
a specified period of
time.
• Financial Year( 1st April –
31st march) (Q1, Q2, Q3
& Q4)
Nominal GDP & Real GDP
• Nominal GDP: • Real GDP: Measured
Measured at current at constant base
year market prices year prices
• Reflects the effect • Adjusts for the
of inflation of
output inflation(it
removes the effect
of inflation.)
•
Gross National Product
• GNP ≡ GDP + Factor
income earned by the
domestic factors of
production employed in
the rest of the world –
Factor income earned by
the factors of
production of the rest
of the world employed in
the domestic economy.
• Hence, GNP ≡ GDP + Net
factor income from
abroad
GDP Deflator
• A measure that shows how much prices of all
goods and services produced in a country have
increased (inflated) or decreased (deflated)
over time.
• It tells us how much of the increase in GDP is
because of price changes (inflation), not
because of actual increase in production.
• GDP Deflator = Nominal GDP/Real GDP x 100
Nominal GDP (₹ Real GDP (₹ crore,
Year
crore) base year prices)
2024 ₹220 lakh crore ₹200 lakh crore
Incremental Capital Output Ratio
• ICOR indicates the
additional unit of
capital or investment
needed to produce an
additional unit of
output.
• A lower ICOR is
preferred as it
indicates a country's
production is more
efficient.
New GDP series
Inflation
● Inflation is a rise in the general level of prices of goods and services
in an economy over a period of time.
● When the general price level rises, Each unit of currency buys fewer
goods and services. This implies that:
● The purchasing power of money gets eroded.
● There is a loss in real value of money
Skewflation
• Skewflation refer
s to a situation
where the prices
of a single
commodity or a
specific group of
commodities rise
significantly,
while the prices
of most other
Headline Inflation & Core
Inflation
• Headline Inflation is the
overall increase in prices of
everything—It includes all
items.
• Core Inflation removes the
volatile items like food and
fuel whose prices change too
frequently. It focuses on
items that show long-term
price trend.
• The Reserve Bank of India's
(RBI) monetary policy mainly
focuses on headline inflation.
• Food and fuel make up more
than 50% of India's CPI
basket, so ignoring them would
not represent the experience
of the common consumer.
Consumer Price Index
• The CPI measures the average change in prices of a fixed basket of
goods and services that households typically consume.
• The Ministry of Statistics & Programme Implementation released the
Consumer Price Index (CPI) with Base 2024=100. The item basket and
the corresponding weights are based on Household Consumption
Expenditure Survey 2023-24.
• The revision is intended to improve the accuracy and relevance of
CPI estimates, strengthen methodological transparency, and
support better-informed economic policymaking.
Economic Recovery
• K-shaped recovery: is a type of economic
recovery following a recession where different
parts of the economy recover at significantly
different rates, times, or magnitudes.
Intangible Investments