It is the final value of all final goods and services produced within the boundary of a nation during one year period. It measures the market value of all the goods and services produced within the borders of the country.
- It is the most used method of National Income Accounting.
- Per annum percentage change in it is the ‘growth rate’ of an economy.
- It is a ‘quantitative’ concept and its volume/size indicates the ‘internal’ strength of the economy.
- It is used by the International Monetary Fund (IMF)/World Bank (WB) in the comparative analyses of its member nations.
It is not a qualitative concept. It talks only about Growth but not Development.
GDP does not include several factors that influence the standard of living such as Externalities (for example- pollution); Nonmarket transactions (such as household production, bartering of goods and services, and volunteer or unpaid services); Non-monetary economy (for example- Bartering), domestic works, Child rearing); Technological improvements; Sustainability of growth; wealth distribution etc.
Salaries earned by foreign employees in any Indian state are included in India’s GDP.
Salaries earned by Indian employees in any foreign country are not included in India’s GDP.
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