CHANGE IN CALCULATION MEASURE

From the years not only those who are studying economics now but all those who had studied it from years, are using the method of factor cost to calculate Nation’s GDP, which gives us the calculated value as GDPFC(Gross domestic product at factor price).

Now, after reforming planning commission into NITI Aayog new government reformed this calculating process to calculate GDP at market price which gives us the calculated value as GDPMP(Gross domestic product at market price) which is mathematically the sum of GDPFC and NET INDIRECT TAX(INDIRECT TAX- SUBSIDIES). The question here arises is why to consider taxes and subsidies in our annual product or income. Is any physical product is came out of this additional domestic income. When every nation is calculating their domestic product at factor costs why India as a open economy should go through different process.

The GDP of last year with previous method was 4.7% which is now represented as 6.9% with new method of calculation. The dilemma in every person who studies economy is that which growth rate we should rely on, Which is the best indicator a person must rely on. Which is our actual growth rate, is it 4.7% or is it 6.9%. Why this new measure is developed to measure is it to violet Indian public that we made our GDP growth to this extent. Where should a economics student rely upon, either on books where GDPFC is best measure or in government Amended measure of GDPMP, which includes NET INDIRECT TAXES. New government is accountable to answer all the dilemma in a economics activists.

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