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India to be a $ 7 Trillion Economy By 2030: CEA

PWOnlyIAS November 20, 2023 04:04 2266 0

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Context The chief economic advisor (CEA) has said that India will be a $ 7 trillion economy in the next seven years if the present growth rate is maintained.

India to be a $ 7 Trillion Economy By 2030: CEA

Current Statistics on India’s Economy

  • Present Status: Currently, India’s economy is the fifth-largest economy in the world and is poised to become the third-largest economy in a few years.
  • Upcoming Projections: If the present growth trajectory is maintained, the belief is that India will achieve a $ 7 trillion economy in seven years. 
  • RBI Estimation: According to the latest RBI estimates, India’s economy is expected to grow 6.5% this financial year, significantly lower than the 7.2% recorded in 2022-23. 
  • IMF Estimation: On the other hand, the International Monetary Fund (IMF) has projected growth of 6.3% every year till 2028.
  • India’s Economy Calculation:
    • The economic value of a country is estimated by calculating its Gross Domestic Product (GDP), which is the total value of all the goods and services produced in a country in one year.
    • GDP is the most common method employed by countries around the world to measure their economic health. 

How is India’s GDP calculated?

  • Expenditure Method for Calculating India’s GDP:
    • Key components of GDP growth:
      • Private consumption Spending (Private Final Consumption Expenditure or PFCE)
      • Government Expenditure (Government Final Consumption Expenditure or GFCE)
      • Private investments to boost the productive capacity of the economy (Gross Fixed Capital Expenditure)
      • Net exports of the country (Net Exports or NX)
    • GDP = private consumption + gross private investment + government investment + government spending + (exports – imports).
      • Private Consumption: It refers to spending by consumers. A high confidence level in the economy indicates that consumers are willing to spend, while a low confidence level reflects an unwillingness to spend.
      • Government Spending: It refers to the government spending money on equipment, infrastructure, and payroll. Government spending is critical when consumer spending and business investment both decline sharply.
      • Private Investment: It refers to private businesses spending money to invest in their business activities. 
      • Next Exports: It refers to the goods and services that an economy makes that are exported to other countries.
  • The Output-Based Method for Calculating India’s GDP:
    • This method calculates the total value of economic output and deducts the costs of the intermediate goods that are consumed in the process.
  • The Income Method for Calculating India’s GDP: It is an intermediate method that calculates the income earned by all the factors of production in an economy, including the wages paid to labor, the rent earned by land, the return on capital in the form of interest, and corporate profits. 
    • It deducts some of the items that are not considered payments made to factors of production, such as sales tax and property tax.
    • It adds depreciation, which is a reserve that businesses set aside to account for the replacement of equipment, to the income of the nation.

Latest List of GDP Numbers

  • United States of America: It is the richest country in terms of GDP with a value of $26.95 Trillion. 
  • China: The GDP value of China is $17.9 trillion. It is poised to overtake the US sometime in the future.
  • Germany: With a GDP value of $4.4 trillion, Germany occupies 3rd position in the list.
  • Japan: The country of Japan has a GDP value of $4.24 trillion.
  • India: There is a belief that India has currently achieved $4 trillion in GDP value.  
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7 Trillion Economy FAQs

There is a belief that India has recently achieved $4 trillion in GDP value recently. However, there is no official word about it.

The economic value of a country is estimated by calculating its Gross Domestic Product (GDP), which is the total value of all the goods and services produced in a country in one year.

There are three methods of calculating GDP—the expenditure method, the income method, and the output-based method.

GDP is calculated using the formula: GDP = private consumption + gross private investment + government investment + government spending + (exports – imports).

The United States of America is the richest country in terms of GDP with a value of $26.95 Trillion.

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