Many times you may have heard around you or in newspapers about GDP Gross Domestic Product. So what is it? See, Gross means total and domestic means within the political boundaries of India and products means goods and services which are produced within a year you can earn by only two ways.

Either you produce somethingLike some people are producing cars, bottles, toys, and mobiles you give some services like a doctor, lawyer these people give services or if anyone provides services by working in a company or a coiffure gives services by cutting hairs value of all these goods and services value means if you have cut the hair in 100 Rs then its value is 100 or if you've bought a bottle for 10 Rs then its value is 10 the value of all these goods and services within a year within a country is called GDP If a company of USA comes to India to manufacture something then,



It will be counted in the GDP of India. That will not be counted in the GDP of the USAThat's why we focus so much on making in India campaign's understand this with the help of an example assume there is a mall, some shops are selling clothes in that, some are cutting hairs tarot card reader is predicting the future, providing the services someone is selling utensils. Goods and services are being sold on every floor we note the value of every sold item and we do it for a year and at last, 

We add them that will be the GDP of that mall for the year the same way, how much goods and services are produced in a country within a year is its GDP. The first thing is why it is needed to calculate the GDP Why so much effort is needed to calculate this? If the GDP is going up every year that means the production is more in the country the economy of the nation is good. If the GDP is falling every yearThat means fewer goods and services are being produced in the nation when the production is low then the selling is also low. When there is less selling then this means the business will earn less money earning less money means the purchasing power of people is decreasing economy is going down. We get to know the economic health of our nation by GDP According to that,

The government makes its policies. When the data of GDP is released we get to know about our shortcomings without knowing them we cannot improve themThe GDP of the USA is number one all over the world use's GDP is around 22.9 trillion dollars and the second is China with an economy of18 trillion dollars whereas the economy of India is 2.6 trillion dollars and keeps on changing now you may think about how it is calculated? There is any company that bought a battery from one place and a chip from another place and sold the mobile. So the battery that was bought at its price will be included in the GDP or not. And if that gets added then the final mobile that would be soldThe price of that mobile will be added to the GDP or notAnd if both their prices are added then the price of the battery is added twice to the GDPSo by this, 

The process of calculating the GDP will be incorrect will explain to you with the help of an example assume I want to eat an omelette and I buy the eggs from the market then its price will have added to the GDPBut if someone from a bakery buys the eggs because he wants to make a cake for selling then the price of that egg will not be added. The price of the final product i.e. cake will be added to the GDPThe same happens with every product. All this information is recorded by the Central Statistical OfficeWhich thing is paid for by the businessman and what are the things that consumers are buying? The products that are counted in this are the ones that are sold after production I make a wooden product at my home and keep it in my home then it will not be counted in GDP productions along with the goods and services,

Investment is also counted in the GDPInvestment can be a risky and complicated process biggest question is where to invest so that we will earn profit. Research is required for this. And deciding this becomes more difficult when there are very unexpected things just like CoronaDuring covid, the market suddenly changed. Many companies shut down during this time and investment became riskier. But during this time too, many companies are such that sustained themselves and they saw very good growth many companies are that stable that there was no effect on them by this small case gives you an option to invest in a portfolio whose name is

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The first is if there is more production of goods and services and the second case can be maybe the production is not much but the prices have increased. The first case is called the Real GDP and the second case where the GDP has increased due to the increased prices call that nominal GDP. That's why when the government presents the data of GDP in front of you then you have to pay attention that is real GDP or nominal GDP. The main purpose of GDP is to tell the production of goods and services of the country. So that's why the second case where the GDP is increasing due to the price we consider that then we don't get to know the actual economy of the country. To find the solution for that, a base year was taken like the GDP in India is calculated by taking the base year as 2011-12. When you see the data of GDP in the newsThen data is written in two ways the first is GDP at constant prices and the second is GDP at current prices.

When GDP at constant prices is written that means 2011 is taken as the base year GDP at current prices means the base year is the current year whenever the product is made in factory tax is not included in that time. The price at that time is called the factor price and when the tax is added then it is called the market price before 2015, the GDP was calculated with factor price after that, it is being calculated by the market price there is a house where four people in it and their income is 100 the income of the second house is 120 Rs and there are 20 people in thatEven though the income of the second house is more the first house will manage easily. 

The GDP of the UK and India is almost the same but due to IMF and the world bank population, the UK is considered goodThe GDP of the UK and India is the same but there is a huge difference in GDP per capita of the UK is around 40,000 whereas the per capita of India is 1900There are many formulas to calculate the GDP. GDP by expenditure income by production. But you don't have to get into that that is the work of a financial expert but when the government presents the data of GDP to you, then you have to pay attention to some things like nominal GDP, real GDP, GDP at the constant price it is GDP at the current price. 

The GDP is calculated in two ways the first is annually and the second is quarterly there are four quarters in a year and the first quarter will be compared with the first quarter of the previous year. So that we can compare the production of the rainy season with the rainy season of the previous year in 2020, due to corona, the third-quarter rate of the GDP went down to 0.4%The third quarter will be compared to the same quarter the next yearThe GDP rate will rise by little production because it was way too down in corona times the GDP doesn't need to increase only. 

After all, the production GDP rate is calculated in a very simple way the GDP was 100 in the third quarter of the previous year in the third quarter of the current year, GDP is 105Then the GDP rate will be 5 %The GDP has some limitations too. It is very difficult to add the data of informal sectorsMaximum sectors in India are an unorganized second problem in this is the shell companies that don't produce the goods and services they are established just for the purpose of money laundering and saving taxes which are called shell companies are counted in the GDPBecause the government benefits from adding these companies they add them and doesn't take any legal action against them from the report of MCA in 2019, 

We got to know that 36% of the companies are shell companies which means they are just showing taxes and doing money laundering in actuality, they are not producing any goods or services. But then also their data is counted in the GDP every government does these kinds of tricks to increase the data of their GDPIf GDP increases then unemployment will decrease. And because the government is not showing the correct GDP data and this is the reason why India is the first country where the rate of GDP is increasing and the unemployment rate is also increasing.