What is GDP and why is it always in news in India?

Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced in a country in a year. GDP is one of the primary indicators of a country's economy. Most often, the GDP is expressed in comparison to the previous year. India is a growing economy, hence you frequently hear about percentage of GDP growth.

Quick Fact: The United States of America has the highest GDP in the world.

How is GDP measured?

GDP can be measured in three different ways: production, income, and expenditure.

Theoretically, all three ways should yield the same result.

The production approach is based on the calculated market value of all final goods and services in a year.

The income approach, in simple terms can be defined as the sum of income of all individuals in a year.

The expenditure approach can be explained as sum of expenditures incurred by all individuals in a year.

GDP per-capita is very simple to understand. It is GDP divided by the population. Its a good indicator of living standard in a country.

As per the 2011-12 data, the top five states in India based on GDP are:

Maharashtra

Andhra Pradesh

Uttar Pradesh

Tamil Nadu

Gujarat

GDP Growth Rate in India over the years based on World Bank Data