India is no longer the fastest-growing Economy

Context

India lost its fastest-growing major economy tag in the fourth quarter of 2016-17, with GDP growth coming in at 6.1% compared with China’s 6.9%.

Data

  • Data from the Ministry of Statistics on Wednesday showed GDP grew 7.1% in the financial year 2016-17, slower than the 8% registered in 2015-16.
  • The GDP numbers were based on the new 2011-12 base year recently adopted for data including the Index of Industrial Production (IIP) and Wholesale Price Index (WPI).
  • Gross value added (GVA) growth was 6.6% for 2016-17 and 5.6% in the fourth quarter, compared with 7.9% in 2015-16 and 8.7% in Q4 of that year.

GDP and its importance

  • The gross domestic product(GDP) is one of the primary indicators used to gauge the health of a country’s economy.
  • Economic production and growth – what GDP represents – has a large impact on nearly everyone within that economy.
  • A significant change in GDP, whether up or down, usually has a significant effect on the stock market
  • Investors worry about negative GDP growth, which is one of the factors economists use to determine whether an economy is in a recession.

Reasons for slowdown

  • The numbers show a clear slowdown in GVA. Post-demonetization there has been a slowdown.
  • The GDP growth rate is slightly higher (than GVA growth) because of a more than proportionate increase in indirect tax net of subsidies.

GDP

  • Gross domestic product is the best way to measure a country’s economy.
  • GDP is the total value of everything produced by all the people and companies in the country.
  • It doesn’t matter if they are citizens or foreign-owned companies. If they are located within the country’s boundaries, the government counts their production as GDP.

Demonetization

  • Demonetization is the act of stripping a currency unit of its status as legal tender. It occurs whenever there is a change of national currency: The current form or forms of money is pulled from circulation and retired, often to be replaced with new notes or coins.
  • Sometimes, a country completely replaces the old currency with the new currency.
  • The opposite of demonetization is re-monetization, in which a form of payment is restored as legal tender.
   

What do you mean by GDP, GNP and GVA?

GDP Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period. GDP includes all private and public consumption, government outlays, investments, private inventories, paid-in construction costs and the foreign balance of trade (exports are added, imports are subtracted) Thus the … Continue reading “What do you mean by GDP, GNP and GVA?”

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