The National Statistical Office (NSO), Ministry of Statistics and Programme Implementation has released the estimates of Gross Domestic Product (GDP) for the first quarter (April-June) Q1 of 2020-21, both at Constant (2011-12) and Current Prices.
- GDP at Constant (2011-12) Prices in Q1 of 2020-21 is estimated at Rs 26.90 lakh crore, as against Rs 35.35 lakh crore in Q1 of 2019-20, showing a contraction of 23.9 percent as compared to 5.2 percent growth in Q1 2019-20.
- GDP at Current Prices in the year Q1 2020-21 is estimated at ₹ 38.08 lakh crore, as against ₹ 49.18 lakh crore in Q1 2019-20, showing a contraction of 22.6 percent as compared to 8.1 percent growth in Q1 2019-20.
Idea of National Income
- GDP – Gross Domestic Product (GDP) is the value of the all final goods and services produced within the boundary of a nation during one year period. It is also calculated by adding national private consumption, gross investment, government spending and trade balance (exports-minus- imports).
- NDP – Net Domestic Product (NDP) is the GDP calculated after adjusting the weight of the value of ‘depreciation’. This is, basically, net form of the GDP, i.e., GDP minus the total value of the ‘wear and tear’ (depreciation).
- GNP – Gross National Product (GNP) is the GDP of a country added with its ‘income from abroad’. Here, the trans-boundary economic activities of an economy is also taken into account.
- NNP – Net National Product (NNP) of an economy is the GNP after deducting the loss due to ‘depreciation’.
Cost and Price of National Income
- Income of an economy, i.e., value of its total produced goods and services may be calculated at either the ‘factor cost’ or the ‘market cost’.
- ‘Factor cost’ is the ‘input cost’ the producer has to incur in the process of producing something (such as cost of capital, i.e., interest on loans, raw materials, labour, rent, power, etc.). This is also termed as ‘factory price’ or ‘production cost/price’. This is nothing but ‘price’ of the commodity from the producer’s side.
- The ‘market cost’ is derived after adding the indirect taxes and deducting subsidies from the factor cost of the product, it means the cost at which the goods reach the market, i.e., showrooms. This is also known as the ‘ex-factory price’. The weight of the state taxes are then added to it, to finally derive the ‘market cost’. In general, they are also called ‘factor price’ and ‘market price’.
- Earlier India used to calculate its national income at factor cost but since 2015, the CSO has switched over to calculating it at market price.
- Income can be derived at two prices, constant and current.
- The difference in the constant and current prices is only that of the impact of inflation.
- Inflation is considered stand still at a year of the past (this year of the past is also known as the ‘base year’) in the case of the constant price, while in the current price, present day inflation is added.
- Current price is, basically, the maximum retail price (MRP) which we see printed on the goods selling in the market.