CIA-1: Analysis of GDP and components

Arnav Jain
2440820
2EMS

Submitted to
Deepak Johnson K

1
 Index
Particulars Pg. no
Title and Index 1-2
Introduction 3-4
Results and discussions 5-9
Analysis of GDP 10-11
Conclusion 12

2
 INTRODUCTION

Gross Domestic Product (GDP) is the total monetary value of all final goods and services
produced within a country’s borders over a specific time period, typically a year or a quarter.
It serves as a broad measure of a country's overall economic activity and is a key indicator of
economic health. There are three approaches for calculation of GDP : income method ,
production method and expenditure method.

The components of GDP (Gross Domestic Product) under the expenditure approach are:

Consumption (C): Household spending on goods and services.

Investment (I): Business spending on capital goods, new homes, and inventories.

Government Spending (G): Government expenditures on goods and services.

Net Exports (NX): Exports minus imports, representing foreign trade.

The purpose of the analysis of India’s GDP is to get insight into economic growth and how
much production processes are conducted in India, but we cannot confuse this analysis as a
benchmark for the welfare of the people as GDP need not be a reliable measure for the well-
being of the population of the country. The country’s growth can be tracked down using the
GDP of each year and keeping a base year as a constant for a fair comparison between
different trend values , furthermore, we can talk about future growth and discuss about
financial decisions in an economy .

The methodology I am using is the Expenditure method where the subtotal of final
expenditure incurred by households, firms, government and foreigners is GDP at market
prices

3
 Precautions for calculation

1. Only the expenditure on final goods and services should be included in the national
income estimation whereas intermediate consumption expenditure should be excluded.

2. The amount spent in buying of second hand goods should not be taken into account in
the estimation of national income for the current accounting year. That’s because they have
been added to the national income of the accounting year when they were originally
purchased.

3. It excludes expenditure on shares and bonds. In this case, these are only mere
financial assets that don't present any production activity of the goods or services.

4. Imputation for value of goods and services produced for what is called, self
consumption.

5. The government should not include expenditure on transfer payments. Thus,

payments of this nature are not connected to any production activity in an economy.

6. All amounts are fixed with 2011-12 as the base price and the period is 10 years.

4
 Results and discussions
1. The value of private final consumption expenditure is as follows:

YEARS VALUE( CRORES)

2013-14 55,57,329
2014-15 59,12,657
2015-16 63,81,419
2016-17 69,00,236
2017-18 73,30,728
2018-19 78,50,444
2019-20 82,56,218
2020-21 78,19,509
2021-22 87,32,573
2022-23 93,23,825
2023-24 96,99,214

PFCE
1,20,00,000
1,00,00,000
80,00,000
VALUE

60,00,000
40,00,000 VALUE( CRORES)
20,00,000
Linear (VALUE( CRORES))
0
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24

YEARS

In the above graph we can see how private final consumption expenditure has increased over
the period from 2013 one of the major reasons for this increase in consumption is the increase
in population overall but as this is total consumption , there was a dip in 2020-21due to the
pandemic which made consumer buy less of goods which were wants and not needs . Overall
a steady growth can be seen.

5
 2. Value of Government final consumption expenditure from 2013 to 2024
is:
YEAR VALUE( CRORES)
2013-14 9,79,825
2014-15 10,54,151
2015-16 11,32,802
2016-17 12,01,598
2017-18 13,44,843
2018-19 14,34,945
2019-20 14,91,606
2020-21 14,80,124
2021-22 14,80,394
2022-23 16,13,726
2023-24 16,53,333

GFCE
18,00,000
16,00,000
14,00,000
12,00,000
10,00,000 VALUE
8,00,000
6,00,000
4,00,000
2,00,000
0

YEAR

In the given graph we can see a constant increase in investment from 2013 to 2018, after
which the expense increased as the government focused on security infrastructures and

6
businesses, the expansion of digital services, and growing public awareness surrounding the
importance of cybersecurity. Also focus shifted towards UPI which required a large
investment but in 2021 we can see a dip due to the hit of pandemic where the government
aimed to recover from economic damages thus investment by government was less.

3. The value of gross domestic capital formation for the period is :

Year Gross Fixed Capital Changes in Stocks GDCF

2013-14 31,94,924 1,29,758 33,24,682

2014-15 32,78,096 2,74,751 35,52,847

2015-16 34,92,183 2,39,557 37,31,740

2016-17 37,87,568 1,22,639 39,10,207

2017-18 40,83,079 2,06,436 42,89,515

2018-19 45,40,509 2,62,771 48,03,280

2019-20 45,92,579 1,08,537 47,01,116

2020-21 42,66,684 25,616 42,92,300

2021-22 50,14,263 1,60,203 51,74,466

2022-23 53,46,423 1,83,464 55,29,887

2023-24 58,26,880 1,94,349 60,21,229

Value of GDCF
40,00,000
VALUE IN CRORES

30,00,000

20,00,000

10,00,000

0
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21
-10,00,000
YEARS

Exports of Goods Import of Goods

Net Exports Linear (Net Exports)

The given data about the gross fixed capital formation and change in stock adds and forms
the Gross Domestic Capital Formation , which has a steady growth from 2013 to 2020 after

7
which there is a significant dip caused by pandemic .Still recovery from pandemic has been
steady as aided by government spending, rising private investments, and robust infrastructure
development . Change in stock is the unsold stock which shows consistency where gross
fixed capital formation truly influences the GDCF and has seen a dip similar to GDCF. The
gross domestic capital formation is highest in 2023 -24 because of advanced infrastructure
and government support

4. The value of net exports for the period is

Year Exports of Goods Import of Goods Net Exports

2013-14 24,68,269 26,44,555 -1,76,286

2014-15 25,12,145 26,67,595 -1,55,450

2015-16 23,70,282 25,11,540 -1,41,258

2016-17 24,88,423 26,21,593 -1,33,170

2017-18 26,02,012 30,78,274 -4,76,262

2018-19 29,12,480 33,49,861 -4,37,381

2019-20 28,13,894 33,21,757 -5,07,863

2020-21 26,18,153 29,02,463 -2,84,310

2021-22 33,93,107 35,43,745 -1,50,638

2022-23 38,47,742 39,19,021 -71,279

2023-24 39,48,947 43,47,870 -3,98,923

Net exports
50,00,000

40,00,000
value in crores

30,00,000

20,00,000

10,00,000

-10,00,000

years

Exports of Goods Import of Goods Net Exports

In the given graph we can see how imports , exports and net exports have behaved over the
last 10 years , well from 2013 to 2017 there was very less difference between imports and

8
exports making net exports be around null value where imports were almost equal to exports
,after 2017 imports increased where as exports increased at slower rate because of which
difference between them increased Till 2020 imports where increasing rapidly but due to
pandemic imports and exports again declined till 2022 as this was the period of isolation of
people and setback of trade between countries but after 2022 imports has increased where as
exports are increasing slowly but there was stagnation in international market due to wars
leading making the value of net exports null 2022-23 and after which imports have surpassed
exports. Overall India has always imported more and exported less because of it being a
developing country and thus net exports have always remain negative or around null value.

9
 ANALYSIS OF GDP
GDP is the summation of all the components mentioned above
YEARS PFCE GFCE GDCF Net Exports GDP
2013-14 5557329 979825 3324682 -176286 9685550
2014-15 5912657 1054151 3552847 -155450 10364205
2015-16 6381419 1132802 3731740 -141258 11104703
2016-17 6900236 1201598 3910207 -133170 11878871
2017-18 7330728 1344843 4289515 -476262 12488824
2018-19 7850444 1434945 4803280 -437381 13651288
2019-20 8256218 1491606 4701116 -507863 13941077
2020-21 7819509 1480124 4292300 -284310 13307623
2021-22 8732573 1480394 5174466 -150638 15236795
2022-23 9323825 1613726 5529887 -71279 16396159
2023-24 9699214 1653333 6021229 -398923 16974853

GDP
18000000

16000000

14000000

12000000
VALUE(CRORES)

10000000

8000000

6000000

4000000

2000000

0
2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24
YEARS

GDP

10
Gross Domestic Product (GDP) values over the years from 2013-14 to 2023-24.

 Noticeable Dip in 2020-21:The most noteworthy bump is around the year 2020-21.
That's likely to be intuitive with the global economic impact of the COVID-19
pandemic disrupting economies across the globe.

 Recovery and Growth Post-Dip:The GDP values zigzag down, with a sharp recovery
and continuous upward trajectory to their highest point in 2023-24. That suggests a
roaring economic recovery and growth right after the initial pandemic impact.

 Visualization Breakdown:
1. 2013-14 to 2019-20: It's steady growth, economic stability and development.
2. 2020-21:It could be the dip, it can be the pandemic playing a role in the economic
slowdown. Trade was disrupted, economic activities were reduced and lockdowns
took place at this time.
3. 2021-22 to 2023-24:You can see post pandemic recovery all around you. There’s
a sharp rise in the GDP, which means they are effective economic policies, more
vaccinations, businesses opening up, and putting supply chains back in place.

 Implications:
1. Economic Resilience: All this shows the economy is resilient and adaptable to
global challenges and has made a recovery, followed by growth.
2. Policy Effectiveness: This sharp recovery could also mean that effective
government interventions and policies are being designed to increase economic
recovery.
3. Future Projections: The growth trend may also result in a trend of further
economic improvement, as well as more investment possibilities.

11
 CONCLUSION
The above analysis of GDP of India over last decade provides the insight how did the nation
perform on the economic front. Data in the present trends indicate a steady growth trend to
major components, such as private consumption, government expenditure, as well as gross
capital formation, notwithstanding constant negative net exports, the consequence of India’s
positioning as a developing country. This downturn in GDP post COVID 19 pandemic of
2020-21 was a strong setback, affecting the flow of economic activities and trade. Yet, as is
often the case in Japan, the subsequent rebound has been strong, with GDP back to its peak in
2023–24 suggesting an impressive economic resilience and a good set of government
policies. The up trend indicates that India is ready for future growth with opportunities of
continued investment and economic development. In the context of the analysis, prudent
policy decisions are seen to play a crucial role in creating sustainable growth as well as
serving to resolve global challenges.

REFRENCES
Mankiw, N. G. (2010). MACROECONOMICS (SEVENTH EDITION). Worth Publishers.

https://jollygreengeneral.typepad.com/files/n.-gregory-mankiw-macroeconomics-7th-

edition-2009.pdf

12