dings:**
•India GDP growth: 8.2% in FY24 (fastest major economy)
•CPI Inflation: 5.4%
•Fiscal deficit: 5.6% of GDP (below 5.9% revised estimate)
•Current Account Deficit: 0.7% of GDP (very comfortable)
•Forex reserves: $640 billion (8–9 months import cover)
GDP Measurement Methods
Production/Output Method: Sum of value added in all sectors
GDP = Primary (Agriculture) + Secondary (Industry) + Tertiary (Services)
Expenditure Method: C + I + G + (X−M)
•C = Private consumption (largest, ~55% of India's GDP)
•I = Gross Fixed Capital Formation (investment)
•G = Government expenditure
•X−M = Net exports (India usually negative = trade deficit)
Income Method: Sum of factor incomes — wages, rent, interest, profit
India's GDP structure (2024):
•Services: ~55% (IT, BFSI, trade, telecom, tourism)
•Industry: ~27% (manufacturing, construction, utilities, mining)
•Agriculture: ~17% (crops, livestock, forestry, fisheries)
Inflation Types & Measurement
CPI (Consumer Price Index): Measures retail inflation. MPC's target = 4% (±2%).
•Base year: 2012
•Weights: Food & Beverages (45.86%), Housing (10.07%), Transport (8.59%), Fuel (6.84%), Health (5.89%)
WPI (Wholesale Price Index): Measures wholesale inflation.
•Base year: 2011-12
•Higher weight to manufactured goods and fuel
•Used for GDP deflator computation
Core inflation: CPI excluding food and fuel — measures underlying demand pressure
RBI tools to control inflation:
1.Increase repo rate → credit becomes costly → demand falls → inflation reduces
2.CRR increase → less money with banks → credit crunch → demand falls
3.Open Market Operations (OMO): Sell G-Sec → suck liquidity from market
India's Major Economic Challenges (For UPSC/Banking Exams)
| Challenge | Current Status | Policy Response |
|---|
|-----------|---------------|----------------|
| Unemployment | Youth unemployment ~17% (PLFS 2024) | PLI schemes, MGNREGS, Skill India |
|---|---|---|
| Agriculture distress | 40% workforce, 17% GDP mismatch | PM-KISAN, MSP, PMFBY, e-NAM |
| Fiscal consolidation | 4.9% deficit (FY25) | FRBM roadmap, Capex over revenue spending |
| Current Account | Manageable 0.7% of GDP | Service exports (IT, tourism), remittances |
| Manufacturing | Only 17% of GDP | Make in India, PLI for 14 sectors |
| Urban infrastructure | Rapid urbanisation | Smart Cities, AMRUT, Metro networks |
| Climate transition | Net zero by 2070 | Solar (280 GW target), Green Hydrogen Mission |