MACROECONOMICS PROJECT
TOPIC- COMPONENTS OF GROSS
DOMESTIC PRODUCT
GROUP MEMBERS:
NAME ROLL NO.
1.Mayank Pandey 0058
2.Muskan 0242
3.Vishesh 0181
ABSTRACT
This project aims to provide detailed analysis of the components of
Gross Domestic Product (GDP), which serves as a fundamental
indicator of economic health and productivity within a country. The
study delves into the four primary components of GDP: consumption,
investment, government spending, and net exports, exploring their
individual contributions and interrelationships in driving economic
growth.
The project employs both quantitative and qualitative methodologies
to examine historical trends, theoretical frameworks, and empirical
data to understand the significance of each component in shaping the
overall GDP dynamics. Additionally, it investigates the impact of
various factors such as fiscal policies, technological advancements,
and global trade patterns on the composition and fluctuations of GDP
components.
Furthermore, the project discusses the implications of the COVID-19
pandemic on GDP components, highlighting shifts in consumer
behavior, investment patterns, government interventions, and trade
dynamics. By synthesizing insights from economic theories, statistical
analysis, and real-world events, this study provides valuable insights
for policymakers, economists, and businesses to formulate strategies
for promoting sustainable economic growth and resilience in the face
of evolving challenges.
INTRODUCTION
Expenditure method /Income disposal method:According to this
method national income is estimated as the sum total of final
expenditure made by the households, government business forms and
foreigners on purchase of final goods and services during an
accounting year.
GROSS DOMESTIC PRODUCT(GDP)-It refers to the total value of all
the final goods and services produced within the country during a
Financial year.
The sum total of all final expenditure is equal to the gross domestic
product at market price (GDPMP).
National income(NNPFC)= GDPMP- Depreciaton + NFIA - NIT
GDP(MP)= Private final consumption expenditure + Government final
consumption + Gross domestic capital formation + Net exports
Private final consumption expenditure:It refers to the expenditure
on consumer goods by the individual households & Private non-profit
Institutions serving households.
It includes durable, non durable, semi durable consumer goods and
consumer services.
Government final consumption:The expenditure in the code on
providing administrative services like law and order, defense,
education, health etc. to people is termed as government consumption
expenditure.
It is equal to the cost of goods and services produced by the
government for collective consumption by the public. It is valued at the
factor cost as they are not normally sold in the market.
To finance its consumption expenditure the government imposes taxes
on production units and households.
Gross domestic fixed capital formation/Gross investment:It refers
to the expenditure incurred by the production units to increase the
capital Stock for production of goods and services.It includes both
investment on fixed assets as well as change in inventory.
Gross fixed capital formation:It refers to the expenditure incurred on
purchase of fixed asset which is divided into 3 categories:
1.Gross fixed investment:It includes the expenditure incurred on
purchase of plants and machinery, equipment etc. by business
enterprise.
2.Gross residential investment: It includes the expenditure incurred
on purchase or construction of new houses by the households.
3.Gross public investment:It includes the expenditure in accord on
construction of dams, roads, bridges, flyovers and other infrastructural
developments for public by government.
Inventory investment / Change in stock:It refers to the change in
the stock of raw materials, semi finished goods and finished goods.
Change in stock = Closing stock - Opening stock
Net exports:It refers to the difference between exports and imports of
a country during an accounting year.
Net exports= Exports - Imports
LITERATURE REVIEW
Work by M Sulthana Barvin, J Moses Gnanakkan
(Journal of Positive School Psychology, 6770-6779, 2022)
A Study On The Growth And Trend Of Indian GDP And Its
Components
The paper has identified and measured the growth of the Indian GDP.
Globally, Indian economy is an emerging and fastest growing
economy. Compared to the international economies, the Indian
economy is a trillion economy and focusing on achieving 5 trillion
economy in 5 years. Among the largest economy, the India and China
are having more than 8% of the growth in GDP. This study shows a
sharp decline in the growth after 2020 due to Corona pandemic. This
is not only the Indian economy, it has been witnessed as global
economical and healthcare crisis. The components of the GRP shows
that major portion of the Indian GDP is contributed by the Private final
consumption and export import of the country. When the private
consumption is maintained, the Indian GDP will be having strong
growth in future. The Government final consumption has supported
the Indian GDP during the pandemic. It shows the Indian strong
economic growth and support.
Data of various years taken from RBI site
(Base year : 2011-12)Current prices
Items/ 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23
Year
PFCE 912653 100361 112052 122453 121501 143443 164947
3 53 96 57 03 36 33
GFCE 158665 184011 204555 221193 230279 262536 281920
8 9 2 3 4 1 5
GFCF 433867 481560 556842 572038 540373 678639 794319
1 0 2 6 9 1 9
∆ in 138083 237581 318234 135231 26357 163438 181754
stock
Valuabl 167326 241685 226104 194800 271464 379112 330994
es
Export 294877 321152 376629 375218 370923 504964 620730
2 1 4 8 7 5 9
Import 322059 375138 447716 427023 378729 566902 720321
1 9 9 2 4 3 3
Discrep 306216 458773 246934 113930 246474 208247 466730
ancy 7
GDP 153916 170900 188996 201035 198299 234710 272407
69 42 68 93 27 12 12
CONCLUSION
More GDP cannot necessarily be equated with more human happiness. But more
GDP does mean more of the goods and services we measure. It means more
jobs. It means more income. And most people seem to place a high value on
these things. For all its faults, GDP does measure the production of most goods
and services. And goods and services get produced, for the most part, because
we want them. We might thus be safe in giving two cheers for GDP - and holding
back the third in recognition of the conceptual difficulties that are inherent in
using a single number to summarize the output of an entire economy.
