The Ministry of Statistics and Programme Implementation (MoSPI) published India’s GDP numbers of April-June Quarter of 2020. The GDP of India has contracted by 23.9% on a year-on-year basis. But what is this year-on-year basis? How is GDP calculated? And what are the controversies surrounding the right figures of GDP? Let’s find it all.
Crux of the Matter
What Is Gross Domestic Product?
Gross Domestic Product (GDP) is the sum total of the values of the final goods and services of all sectors of an economy produced during a given period, usually a year or a quarter. They are two types of GDP i.e. Real GDP and Nominal GDP. In simple terms, Nominal GDP is evaluated at current market prices. Whereas Real GDP measures economic output taking into account inflation or deflation. In India, the Ministry Of Statistics & Programme Implementation (MOSPI) releases the GDP deflator number considering 2011-12 as the base year. Statistically, Real GDP is calculated using formula – Real GDP = (Nominal GDP) / (GDP Deflator).
What Is QoQ And YoY?
QoQ stands for Quarter-on-Quarter. It compares a statistic for one quarter i.e period of 90 days to its preceding Quarter. QoQ GDP percentage change in Quater 2 of 2020 can be calculated as [(GDP of Apr-Jun 2020 – GDP of Jan-Mar 2020) / GDP of Jan-Mar 2020] x 100.
YoY stands for Year-on-Year. It compares a statistic for one period to the same period of the previous year. YoY GDP percentage change in the year 2020 can be calculated by [(GDP of Apr-Jun 2020 – GDP of Apr-Jun 2019) / GDP of Apr-Jun 2019 ] x 100.
Let us have a look at some graphs to under the impact of Coronavirus on various countries’ GDP.
- Laissez-faire is an economic system in which transactions between private parties are absent of any form of economic interventionism such as regulation and subsidies. The phrase laissez-faire is part of a larger French phrase and literally translates to “let [it/them] do”.
- The gross world product (GWP) is the combined gross national income of all the countries in the world. Because imports and exports balance exactly when considering the whole world, this also equals the total global gross domestic product.
- The System of National Accounts is an international standard system of national accounts, the first international standard being published in 1953. The international standard for measuring GDP is contained in it too.