Macro-economic data

Outline of the presentation

• GDP
• Unemployment and Employment trend
• Cost of living
• India’s Fiscal deficit
• Debt trend

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GDP
• GDP is the monetary value of all goods
and services produced in the economy
in a given time period.

• Example: Bread and Gun

GDP= ( quantity of bread produced * price of bread ) + (quantity of guns produced *

price of guns )

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 Types of GDP
Total value of all goods & services produced at
Nominal current market prices(Includes changes in price
due to inflation or deflation)

Ideal economic condition with

Sum of all goods & services produced
100% employment across all
sectors, steady currency and
stable product prices
Potential
GDP Real at constant prices(inflation-adjusted
measurement)

Real time measurement of all output

Actual
at any time interval or at any given
time(Existing state of business of the
economy)
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GDP Formula:
Expenditure GDP= Consumption + Government Expenditure + Investments + Net Exports
Approach

Income GDP=Total National Income + Sales Tax + Depreciation + Net Foreign Income
Approach

Production or GDP= Sum of the value added to products during production process
Value-Added
Approach

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Calculation of GDP in India:
• Production or Value -added Approach
• Expenditure

Fig.1 Value-added Approach Fig.2 Expenditure Approach

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Economic activity
Table -1

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Sector wise trend
2016-17

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Expenditure Method CIS-Change in stocks

Table 2

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Previous method vs Current method:
Table 3
Parameters Previous Current
Price Cost of production Market price
Base year 2004-2005 2011-12

Table 4
Year Old definition & base(GDP growth %) New definition & base(GDP growth %)

2012-13 4.5 5.1

2013-14 4.7 6.9

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Results of the change:

• Reflects the current economic situation.

• Complaint with latest United Nation guidelines in System of National
Accounts.
• In par with international agencies like IMF, World Bank etc.

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Employment and unemployment trend:
• Labour force participation rate

𝑛𝑜.𝑜𝑓 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑 𝑝𝑒𝑟𝑠𝑜𝑛+𝑛𝑜.𝑜𝑓 𝑢𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑 𝑝𝑒𝑟𝑠𝑜𝑛

LFPR= *1000
𝑇𝑜𝑡𝑎𝑙 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛

• Worker population ratio

𝑛𝑜.𝑜𝑓 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑 𝑝𝑒𝑟𝑠𝑜𝑛

WPR= *1000
𝑇𝑜𝑡𝑎𝑙 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛

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• Proportion unemployed
𝑛𝑜.𝑜𝑓 𝑢𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑 𝑝𝑒𝑟𝑠𝑜𝑛𝑠
PU = ∗ 1000
𝑇𝑜𝑡𝑎𝑙 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛

• Unemployment rate

𝑛𝑜.𝑜𝑓 𝑢𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑 𝑝𝑒𝑟𝑠𝑜𝑛

UR= ∗ 1000
𝑙𝑎𝑏𝑜𝑢𝑟 𝑓𝑜𝑟𝑐𝑒

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 Approaches

• Usual principle status approach (UPS)

• Usual principal status and subsidiary approach (UPSS)

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Unemployment trend (India)

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Employment trend

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Major Employment sector in India

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Consumer Price Index (CPI)
• A statistical estimate of the level of prices of goods and services
bought for consumption purposes by households
• Macroeconomic indicator of inflation
• Link: https://courses.lumenlearning.com/boundless-
economics/chapter/cost-of-living/

• Calculation of CPI for multiple items

𝐶𝑜𝑠𝑡 𝑜𝑓 𝐶𝑃𝐼 𝑚𝑎𝑟𝑘𝑒𝑡 𝑏𝑎𝑠𝑘𝑒𝑡 𝑎𝑡 𝑐𝑢𝑟𝑒𝑟𝑛𝑡 𝑝𝑒𝑟𝑖𝑜𝑑 𝑝𝑟𝑖𝑐𝑒𝑠

CPI for multiple items= *100
𝐶𝑜𝑠𝑡 𝑜𝑓 𝐶𝑃𝐼 𝑚𝑎𝑟𝑘𝑒𝑡 𝑏𝑎𝑠𝑘𝑒𝑡 𝑎𝑡 𝑏𝑎𝑠𝑒 𝑝𝑒𝑟𝑖𝑜𝑑 𝑝𝑟𝑖𝑐𝑒𝑠

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Market basket
Groups for the revised CPI (Rural/Urban)
Groups Description
1. Food and Beverages
2. Pan, tobacco and intoxicants
3. Clothing and Footwear
4. Housing
5. Fuel and light
6. Miscellaneous(Transportation, Education, Personal care etc)

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Trend of cost of living in India(2010-2018)

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Wholesale Price Index(WPI)

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Fiscal Deficit

• Total Government expenditure

more than the revenue
generated
• Debts and Deficits
• GFD= Expenditure- revenue

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Government Fiscal Deficit:

Particulars 2016-17 (in Rs. billion)

Expenditure 19,752
Revenue receipts 13,742
Recovery of loans 176
Other receipts 477
Total Revenue 14,396
Fiscal deficit 5,356

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Fiscal deficit

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Fiscal deficit

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Steps taken to reduce fiscal deficit
• Reduce Public Expenditure
• Increasing Revenue from Taxation

• Link: http://www.yourarticlelibrary.com/economics/measures-to-be-
followed-to-reduce-fiscal-deficits/38126

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India’s Debt and Trend
• Accumulated government deficits are called Debt
• India ranks 22nd in world with debt of $5290 Billion

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Internal debt

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External debt

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References:
• http://mospi.nic.in/
• https://courses.lumenlearning.com/boundlesseconomics/chapter/cos
t-of-living/
• https://tradingeconomics.com/
• http://www.mospi.gov.in/central-statistics-office-cso-0
• https://labour.gov.in/annual-reports
• https://data.worldbank.org/

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 Q&A

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