The Gross Domestic Product (GDP) is a core economic concept that serves as a monetary measure of the total market value of all the final goods and services produced within a country's geographical borders during a specific period, typically a year or a quarter. It is the broadest statistical indicator used to gauge a nation's economic activity and health.
The modern concept was developed by economist Simon Kuznets for a 1934 U.S. Congress report, emerging from the need to measure national output and understand the scale of the Great Depression. It became the main tool for measuring a country's economy after the Bretton Woods Conference in 1944. Kuznets himself cautioned against using GDP as a measure of overall welfare.
GDP is calculated using three main approaches: the expenditure approach (sum of consumption, investment, government spending, and net exports), the income approach, and the production approach. The production approach sums the Gross Value Added (GVA) at each stage of production. In India, the Ministry of Statistics and Programme Implementation (MoSPI), through the Central Statistics Office (CSO), is responsible for its calculation.
A key related concept is Gross National Product (GNP) or Gross National Income (GNI), which measures the output of a country's citizens regardless of location, contrasting with GDP's geographical boundary criterion. GDP is also distinguished as Nominal GDP (at current market prices) or Real GDP (adjusted for inflation).
India has recently updated its methodology; in January 2015, the base year was changed from 2004-2005 to 2011-2012. The calculation method also shifted from GDP at factor cost to GVA at basic prices, aligning with the United Nations System of National Accounts (UNSNA), 2008. A further revision is underway, updating the base year to 2022-23, which incorporates richer data sources like GST returns and uses the improved technique of double deflation.