This presentation discusses key Indian macroeconomic indicators such as GDP, cost of living, employment, fiscal deficit, and debt trends. It defines GDP and explains how it is calculated in India using value added and expenditure approaches. It also outlines unemployment and employment rates and trends. Further, it discusses the consumer price index and wholesale price index as measures of inflation and cost of living in India. The presentation concludes with an analysis of India's fiscal deficit and increasing debt levels.
2. Outline of the presentation
• GDP
• Cost of living
• Unemployment and employment
• India’s Fiscal deficit
• Debt trend
23-10-2018 Macroeconomics 2
3. 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 )
23-10-2018 Macroeconomics 3
5. GDP Formula:
23-10-2018 Macroeconomics 5
Expenditure
Approach
Income
Approach
Production or
Value-Added
Approach
GDP= Consumption + Government Expenditure + Investments + Net Exports
GDP=Total National Income + Sales Tax + Depreciation + Net Foreign Income
GDP= Sum of the value added to products during production process
6. Calculation of GDP in India:
• Production or Value -added Approach
• Expenditure
23-10-2018 Macroeconomics 6
Fig.1 Value-added Approach Fig.2 Expenditure Approach
10. 23-10-2018 Macroeconomics 10
Year Old definition & base(GDP growth %) New definition & base(GDP growth %)
2012-13 4.5 5.1
2013-14 4.7 6.9
Previous method vs Current method:
Parameters Previous Current
Price Cost of production Market price
Base year 2004-2005 2011-12
Table 4
Table 3
11. 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.
23-10-2018 Macroeconomics 11
12. Employment and unemployment trend:
• Labour force participation rate
LFPR=
𝑛𝑜.𝑜𝑓 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑 𝑝𝑒𝑟𝑠𝑜𝑛+𝑛𝑜.𝑜𝑓 𝑢𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑 𝑝𝑒𝑟𝑠𝑜𝑛
𝑇𝑜𝑡𝑎𝑙 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛
*1000
• Worker population ratio
WPR=
𝑛𝑜.𝑜𝑓 𝑒𝑚𝑝𝑜𝑙𝑦𝑒𝑑 𝑝𝑒𝑟𝑠𝑜𝑛
𝑇𝑜𝑡𝑎𝑙 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛
*1000
23-10-2018 Macroeconomics 12
18. 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
• Calculation of CPI for multiple items
CPI for multiple items=
𝐶𝑜𝑠𝑡 𝑜𝑓 𝐶𝑃𝐼 𝑚𝑎𝑟𝑘𝑒𝑡 𝑏𝑎𝑠𝑘𝑒𝑡 𝑎𝑡 𝑐𝑢𝑟𝑒𝑟𝑛𝑡 𝑝𝑒𝑟𝑖𝑜𝑑 𝑝𝑟𝑖𝑐𝑒𝑠
𝐶𝑜𝑠𝑡 𝑜𝑓 𝐶𝑃𝐼 𝑚𝑎𝑟𝑘𝑒𝑡 𝑏𝑎𝑠𝑘𝑒𝑡 𝑎𝑡 𝑏𝑎𝑠𝑒 𝑝𝑒𝑟𝑖𝑜𝑑 𝑝𝑟𝑖𝑐𝑒𝑠
*100
23-10-2018 Macroeconomics 18
19. Market basket
23-10-2018 Macroeconomics 19
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)
21. Trend of cost of living in India(2010-2018)
23-10-2018 Macroeconomics 21
22. Fiscal Deficit
• Total Government expenditure
more than the revenue
generated
• Debts and Deficits
• GFD= Expenditure- revenue
23-10-2018 Macroeconomics 22
23. Government Fiscal Deficit:
23-10-2018 Macroeconomics 23
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
26. Steps taken to reduce fiscal deficit
• Reduce Public Expenditure
• Increasing Revenue from Taxation
23-10-2018 Macroeconomics 26
27. India’s Debt and Trend
• Accumulated government deficits are called Debt
• India ranks 22nd in world with debt of $5290 Billion
23-10-2018 Macroeconomics 27
