Gross Domestic Product (GDP) is an economic concept that serves as the standard measure of a country's economic output and health. It is defined as the total monetary value of all final goods and services produced within a nation's domestic borders during a specific period, typically a year or a quarter. The concept's modern form was first developed by American economist Simon Kuznets for a 1934 U.S. Congress report. Kuznets was tasked with creating a quantitative measure of economic health to understand the extent of the shrinking economy and mass unemployment during the Great Depression. After the Bretton Woods Conference in 1944, GDP became the main tool for measuring a country's economy, replacing the previously preferred measure, Gross National Product (GNP).
GDP is calculated using three main approaches: the expenditure approach, the income approach, and the production (or value-added) approach. The most common is the expenditure approach, which uses the formula: GDP = C + I + G + (X - M). Here, C represents Personal Consumption Expenditures (household spending), I is Gross Private Domestic Investment (business spending), G is Government Purchases of goods and services, and (X - M) is Net Exports (exports minus imports). To compare economic output over time, economists use Real GDP, which adjusts the nominal value for inflation using a price deflator.
GDP connects to several related concepts, most notably Gross National Product (GNP), which measures the output of a country's residents both at home and abroad, unlike GDP which focuses on production within the country's borders. It is also closely linked to Gross Value Added (GVA), which is the difference between an industry's output and its intermediate consumption (inputs). In India, the Ministry of Statistics and Programme Implementation (MoSPI) calculates the GDP estimates. India recently revised its GDP series, shifting the base year from 2011-12 to 2022-23 on February 27, 2026, to better reflect the evolving economic structure. This revision introduced methodological changes, such as adopting double deflation and integrating new data sources like the GST (Goods and Services Tax) filings, while the fundamental definition of GDP as the value of final goods and services produced within the country remained the same.