Gross State Domestic Product
Source: Indian Express
GS III: Indian Economy
What is discussed under Gross State Domestic Product?
- Key Findings of the Report
- What Is Gross State Domestic Product?
Why in News?
- The Union Ministry of Statistics and Programme Implementation has released figures for the Gross State Domestic Products (GSDP).
Key Findings of the Report
- Post Covid-19 pandemic, the economies of 19 states and Union Territories exceeded their pre-Covid levels in FY22.
- These 19 states and UTs are Andhra Pradesh, Rajasthan, Bihar, Telangana, Delhi, Odisha, Madhya Pradesh, Haryana, Karnataka, Tripura, Sikkim, Himachal Pradesh, Meghalaya, Jharkhand, Tamil Nadu, Jammu and Kashmir, Punjab, Uttarakhand and Puducherry.
- 7 states recorded double-digit growth rates during 2021-22 among the analysis of official data for 21 states and UTs.
- Andhra Pradesh has the highest GSDP while Puducherry has the lowest.
- Besides Andhra Pradesh, five other states and one UT recorded double-digit growth in 2021-22:
- Rajasthan: 11.04%
Image by Steve Buissinne from Pixabay - Bihar: 10.98%
- Telangana: 10.88%
- Odisha: 10.19%
- Madhya Pradesh: 10.12%
- Delhi: 10.23%
- Rajasthan: 11.04%
- Kerala and Uttar Pradesh are the exceptions in 2021-22 which recorded GSDP below the pre-Covid levels.
- The growth rates of 11 states including Gujarat and Maharashtra were not available for 2021-22.
Causes of growth
- Base effect
- The base effect relates to inflation in the corresponding period of the previous year, if the inflation rate was too low in the corresponding period of the previous year, even a smaller rise in the Price Index will arithmetically give a high rate of inflation now.
- Post pandemic recovery
What Is Gross State Domestic Product?
- The calculation of GSDP/NSDP is similar to the calculation of GDP/NDP for the overall economy in that it measures the volume in monetary of all the products and services produced within the state’s borders.
- GSDP is the sum total of value added by different economic sectors (Agriculture, Industry & Services) produced within the boundaries of the state calculated without duplication during a year.
- It is one of the measures of economic growth for a state’s economy.
- From Gross State Domestic Product (GSDP), the Consumption of Fixed Capitals (CFC) is deducted to arrive at NSDP.
- i.e. NSDP = GSDP – CFC
- Consumption of Fixed Capital (CFC) is the value of fixed capital which is consumed during the process of production.
- It is calculated on the basis of life span of the fixed asset.
Importance of State Domestic Product
- The State Domestic Product (SDP) or State Income is the most important indicator for measuring the economic growth of a State.
- These estimates of the economy, over a period of time, reveal the extent and direction of the changes in the levels of economic development.
- The State Domestic Product is classified under three broad sectors such as Primary sector, Secondary sector and Tertiary sector and is compiled economic activity-wise as per the methodology prescribed by the Central Statistics Office (CSO) and furnished to the Ministry of Statistics and Programme Implementation (MOSPI).
- It throws light on the overall impact of various developmental programmes implemented by the Government and helps in inter-state comparison.
- The Finance Department prepares a macroeconomic framework statement and fiscal policy statement, every year, using the SDP estimates for placing before the Legislature during Budget Sessions as part of Fiscal Responsibility and Budget Management (FRBM) Act, 2005.
Daily Current Affairs : Click Here