Gross Domestic Product 

• Gross Domestic Product (GDP) is defined as the value of all final goods and services produced within the country in a particular year.
• GDP as an economic indicator is used worldwide to show the economic health of a country.
• The National Statistical Office (NSO), under the Ministry of Statistics and Programme Implementation, is responsible for compiling data for calculating GDP.

• In India, GDP is measured as market prices and the base year for computation is 2011-12.
  • GDP at market prices = GDP at factor cost + Indirect Taxes – Subsidies 
• The factor cost refers to the cost of production that is incurred by a firm when producing goods and services.

Real GDP & Nominal GDP

• The main difference between nominal GDP and real GDP is the adjustment for inflation.
• The market value of goods and services taken at current prices is the nominal GDP. The value taken at constant prices — that is prices for all products taken at an unchanged base year — is the real GDP.
• Real GDP growth thus measures how much the production of goods and services in the economy has increased in actual physical terms during a year. Nominal GDP growth, on the other hand, is a measure of the increase in incomes resulting from rise in both production and prices.

Why in News?

• The National Statistical Office has released its latest growth estimates.
• According to the data, economic growth slowed to an 11-year low in 2019-20. Growth rate of Real GDP in the year 2019-20 is now estimated at 4.2 % as compared to 6.1 percent in 2018-19.
• In the final quarter of the year (January-March), the growth rate of GDP fell to 3.1%, reflecting the impact of the first week of the COVID-19 lockdown which began on March 25.