Economic Growth is an economic concept that represents the sustained expansion of a country's productive capacity, resulting in an increase in the quantity and quality of goods and services produced by a society. It is typically measured as the percentage increase in real Gross Domestic Product (GDP), which is the total monetary value of all final goods and services produced within a country's borders over a specific period, adjusted for inflation.
The concept gained prominence following the Industrial Revolution between 1760 and 1860, which led to a sustained rise in real income per person in industrialized nations. The problem it addresses is providing a quantifiable metric for a society's progress in increasing material prosperity and moving away from widespread poverty.
The mechanism of growth is measured by calculating the annual rate of change in real GDP or real GDP per capita. This growth is fundamentally driven by increases in labor productivity (output per unit of labor), capital accumulation (investment in machinery and infrastructure), and technological progress and innovation. The official figures in India are calculated by the National Statistical Office (NSO).
Economic Growth connects directly to key macroeconomic indicators like GDP and Gross National Product (GNP), but it is distinct from Economic Development, which is a broader concept that includes improvements in social welfare, education, and healthcare.
In India, the measurement framework has changed recently: the base year for calculating GDP estimates was revised from 2011-12 to 2022-23 to better capture the structural transformation of the economy, such as the rise of the digital sector and shifts in consumption patterns. This new series integrates improved data sources like the Goods and Services Tax (GST) and the Periodic Labour Force Survey (PLFS). A major methodological change in the earlier 2011-12 series was the shift from using 'factor costs' to 'market prices' for calculating output.