GDP GDP at market price as GDP at

GDP

GDP at market price as GDP at buyer price GVA at basic prices can be referred to as GVA at producer price

• Production taxes or production subsidies are paid or received with relation to production and are independent of the volume of actual production. Some examples of production taxes are land revenues, stamps and registration fees and tax on profession

• Some production subsidies include subsidies to Railways, input subsidies to farmers, subsidies to village and small industries, administrative subsidies to corporations or cooperatives, etc

• Product taxes or subsidies are paid or received on per unit of product. • Some examples of product taxes are excise tax, sales tax, service tax and import and export duties Product subsidies include food, petroleum and fertilizer subsidies, interest subsidies given to farmers, households, etc. through banks

The Gross Value Added (GVA), which broadly reflects the supply or production side of the economy

• Gross value added (GVA) is defined as the value of output less the value of intermediate consumption. • Value added represents the contribution of labour and capital to the production process.

When the value of taxes on products (less subsidies on products) is added, the sum of value added for all resident units gives the value of gross domestic product (GDP) Gross Domestic Product (GDP) = Σ GVA at basic prices + Product taxes - Product subsidies

Gross Value Added Factor Cost Basic Price

factor cost = compensation of employees + operating surplus/mixed income + consumption of fixed capital (CFC) or depreciation

GVA at basic prices =GVA at factor cost + (Production taxes less Production subsidies) or GVA at factor Cost = GVA at basic Prices – (production taxes Less Production Subsidies )

GDP at market prices = GVA at basic prices + Product taxes- Product subsidies GDP at Factor Cost = GVA at basic prices – (Production taxes - Production subsidies) compilation of wages, interests salaries, profits etc

Changing Narrative

• Under the old method, GDP was calculated at factor cost; now it will be done at basic prices

GDP at factor cost - used to be expressed both in constant prices (with 2004 -05 prices as the base year prices) and current prices • GDP at factor cost in constant prices was used as "GDP

revised series • industry-wise estimates are presented as Gross Value Added (GVA) at basic prices, while "GDP at market prices" will be referred to as "GDP

To understand the difference • For a producer, GDP at factor cost represents what he gets from the industrial activity. This can be broken down into various components — wages, profits, rents and capital — also commonly known factors of production

• Aside from these costs, producers may also incur other expenses such as property tax, stamp duties and registration fees, among others. • Similarly, producers may also receive subsidies (production related) such as input subsidies to farmers and to small industries

New Series

Understand the Oil Market

Yellow Line – Spare Capacity Inverted (line up spare Capacity going Down )

Reason -

Inflation

What is WPI ? • Wholesale Price Index (WPI) measures the average change in the prices of commodities for bulk sale at the level of early stage of transactions

The main uses of WPI are the following: • to provide estimates of inflation at the wholesale transaction level for the economy as a whole. This helps in timely intervention by the Government to check inflation in particular, in essential commodities, before the price increase spill over to retail prices. • WPI is used as deflator for many sectors of the economy including for estimating GDP by Central Statistical Organisation (CSO).

• WPI is also used for indexation by users in business contracts. • Global investors also track WPI as one of the key macro indicators for their investment decisions

WPI – New data (2011 base Data)

Consumer Price Index • Consumer Price Index is a measure of change in retail prices of goods and services consumed by defined population group in a given area with reference to a base year • This basket of goods and services represents the level of living or the utility derived by the consumers at given levels of their income, prices and tastes. • The consumer price index number measures changes only in one of the factors; prices

• Presently the consumer price indices compiled in India are CPI for Industrial workers CPI(IW), CPI for Agricultural Labourers CPI(AL) and; Rural Labourers CPI(RL) and (Urban) and CPI(Rural) • compiled by Labour Bureau – (CPI for Industrial workers CPI(IW), CPI for Agricultural Labourers CPI(AL) • Central Statistical Office – urban, rural , Combined

Miscellaneous group (weight of 28. 32 % in CPI - C) includes household goods & services, health, transport & communication, recreation and amusement, education and personal care and effects