Analysis of Economic Performance of India

Running head: BECOMING AN ECONOMIST
Becoming an Economist
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BECOMING AN ECONOMIST1
Table of Contents
Introduction......................................................................................................................................2
Analysis of economic performance of India....................................................................................2
Gross Domestic Product..............................................................................................................3
Growth rate of GDP.....................................................................................................................4
Per Capita GDP............................................................................................................................4
Unemployment............................................................................................................................5
Inflation........................................................................................................................................6
Net Export....................................................................................................................................7
Conclusion.......................................................................................................................................8
Reference list...................................................................................................................................9

BECOMING AN ECONOMIST2
Introduction
Indian economy is largely characterized as a market based developing economy. By
accounted nominal GDP, the economy is the fifth largest in the world. It is third largest nation in
the world in terms of estimated purchasing power parity. India though is developing nation,
however currently it is in the phase of robust opportunities and challenges to achieve targeted
growth and development. India at present is aspired to become a higher middle income nation by
2030 (worldbank.org 2019). The long term economic growth of India remains positive because
of the young population and high rate of savings and investments and relatively smaller
dependency ratio. The growing integration of the nation with the global economy works as a
positive factor in bringing economic growth. Public sector reform played an important role in
economic growth of India. The important reforms in this regard include development of
agriculture, infrastructure and rural development, removal of regulation in the labor market,
encouragement to export and private investment, various financial inclusion, improvement of
public health and education. The report develops an analysis of recent economic performance of
the Indian economy. This has been done by considering performance trend of some vital
macroeconomic indicators.
Analysis of economic performance of India
Economic state of a nation indicates performance of the economy on different aspects.
State of a nation changes with time following change in business and economic cycle. During
different phases of business cycle, an economy undergone periods of contraction and expansion.
In times of expansion, state of the economy sounds positive while in times of contraction the
economy faces adverse consequences from economic downturn (Sowell 2015). There are various
indicators that portrait the economic scenario of a nation. The first important aspect is growth of

BECOMING AN ECONOMIST3
output in the nation. Commonly used indicator for capturing output performance is Gross
Domestic Product. In addition to total output, other indicators crucial for determining economic
state are GDP growth, per capita GDP, inflation, unemployment and state of international trade
(Sloman and Wride 2015). This section of the report discusses current economic state of India in
reference to various indicators.
Gross Domestic Product
Gross Domestic Product of a country is a composite measure of total output produced in
the nation. It gives an estimation of monetary value of all the goods and services that a country
produces in an accounting year. The estimated value of produced goods and services gives an
understanding of economic size (Acemoglu and Robinson 2012). It is a single composite index
that can measure overall state of the economy. By indicating movement of output it helps the
policymaker to understand whether the economy is in expansionary or contraction phase.
Because of its importance in describing state of the economy the measure has significant
importance to the policymakers. GDP of a nation is calculated by aggregating values of produced
goods and services using their market values. Commonly, GDP is classified into two categories –
nominal GDP and real GDP. Nominal GDP is the GDP estimated using the market price of the
current accounting year. Real GDP is the measured value of GDP computed from the accounted
price of a selected base year (Mugge 2016). Since Real GDP is the GDP measure corrected for
inflation it gives a more reliable and accurate measure of output trend.
Evaluation of Real GDP trend in India suggests that the nation in the last four years
experienced an increase in its real GDP. Real GDP of India increased from 2294.9473 billion
dollars in 2015 to 2846.1277 billion dollars in 2018. The growth of various components of GDP
drive GDP of the nation. The first component driving GDP of India is the increase in private