Economic Indicators

What is GDP?

The most widely used measure of national income is gross domestic product (GDP). Economists, governments and international organisations use it to assess what is produced, earned and spent in an economy.

Gross = Total

Domestic = home economy

Product = Output

So, for example, India’s GDP is a measure of the total value of output produced by the factors of production (land, labour, capital and enterprise) based in India in a year.

India's GDP grew by 8.2% in the fiscal year 2023-24, showcasing its robust economic performance. The country's GDP stands at approximately $3.5 trillion (₹288.75 trillion), making it the world's fifth-largest economy​

How does GDP affect us?

When the GDP rises steadily, people pay more taxes because they earn and spend more. This results in more revenue for the government, which can be allocated to public services such as schools, police, and hospitals.

However, the opposite can happen when the economy shrinks and a country enters a recession. Governments tend to receive less tax revenue, which may lead them to freeze or cut public spending, or even increase taxes.

What is GNI?

Gross National Income (GNI) is increasing in importance as a measure. It is included by the United Nations in its Human Development Index. It is the income earned by the country’s residents and firms regardless of where it is earned.

GNI = GDP + (Income residents receive from abroad) - (Income foreigners earn from the country)

Governments also measure Gross National Disposable Income (GNDI).

GNDI = GNI + (Remittances received) - (Remittances sent)

Russia and GNI

Russia has recently been classified as a high-income country by the World Bank, a significant upgrade from its previous upper-middle-income status. This change is driven by substantial economic growth in 2023. Russia's Gross National Income (GNI) per capita increased by 11.2%.

Despite facing numerous sanctions from Western countries due to the Ukraine conflict, Russia's economy showed resilience. The country has rerouted its trade towards it old allies, China, North Korea and Iran and also with neutral countries like India, the Gulf states and African nations. This strategy seems to have borne fruit.

How does GNI affect us?

As citizens, Gross National Income (GNI) influences our economic opportunities, wages, and cost of living. Government policies, including taxation and social welfare programs, are tailored based on GNI, shaping access to essential services like healthcare, education, and infrastructure.

For example, in real-time, fluctuations in India's GNI can influence government decisions on budget allocations for social welfare schemes like the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), impacting millions of rural livelihoods.

What is GPI?

The Genuine Progress Indicator (GPI) measures a nation's economic health by including environmental and social factors missing from GDP. Developed in 1995 by Clifford Cobb, Ted Halstead, and Jonathan Rowe, the GPI uses 26 indicators in three categories:

Social: Benefits from volunteer work, household labour, and family time.

Economic: Adjusts for income distribution and emphasizes sustainable growth.

Environmental: Subtracts costs for pollution and resource depletion, and adds the value of green spaces.

Can GPI Replace GDP?

GPI takes a holistic approach. However, it comes with its own set of challenges.

While GDP remains dominant for its simplicity and data availability, GPI offers a richer view of well-being. It faces hurdles but could help us measure success beyond just wealth.