Gross domestic product
The country’s Chief Economic Advisor (CEA) V. Anant Nagswaran has recently reported that India’s GDP growth in this financial year can decrease by 0.5% in this financial year. Nageswararan said in an interview to Bloomberg TV that if this tariff continues for a long time, its effect will be even more serious and can become a big threat to India’s economy. He hoped that this tariff will not last long, otherwise it would be difficult to avoid its negative effects.
Which sector will suffer the most loss?
This 50% tariff, which came into effect from 27 August, will have the biggest impact on the textile and jewelery sector. According to the Global Trade Research Initiative (GTRI) report, this step can affect India’s exports of about ₹ 5.4 lakh crore. Products like clothes, jewelery, furniture and seafood will now become expensive in the US market, which can cause their demand to fall by about 70%. Apart from this, countries like China, Vietnam and Mexico, where tariffs are low, will sell these goods in America at cheap prices, which will reduce the market share of India’s companies.
India’s GDP growth condition
India’s GDP growth was 7.8% in the first quarter of this financial year, which is the highest in the last five quarters. Manufacturing, services and good progress of the agriculture sector contributed to this bounce. At the same time, the Reserve Bank of India (RBI) has maintained the growth of the economy for the financial year 2025-26 at an estimated 6.5% in its recent Monetary Policy Meeting. The RBI Governor also said that good monsoon and upcoming festivals will support economic activities.
How is GDP calculated?
GDP or GDP is a major indicator of the economic condition of a country. This indicates the total value of all goods and services produced within a certain period within the country. It also includes production activities done by foreign companies in the country.
GDP has two main categories – Real GDP and Nominal GDP. Real GDP is calculated on the basis of stable prices (base year 2011-12), while nominal GDP is at current prices. The formula of GDP calculation is: GDP = c + g + i + nx. Here, C = Private Consumption (Domestic Expenditure), G = Government Expenditure, I = Investment and NX = Net Export (Export – Import)
What factors affect GDP growth?
- Expenditure- Consumers’ purchase promotes economic activities.
- Development of private sector contributes 32% to Indian GDP.
- Government expenditure also contributes up to 11% to GDP due to the expenditure incurred by the government.
- Net demand is removed from the country’s total exports. Since India’s imports are more than exports, it has a negative impact on GDP.