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Definition of 'GDP Per Capita'

A measure of the total output of a country that takes the gross domestic product (GDP) and divides it by the number of people in the country. The per capita GDP is especially useful when comparing one country to another because it shows the relative performance of the countries. A rise in per capita GDP signals growth in the economy and tends to translate as an increase in productivity.

How to calculate GDP ?


The formula is Y = C + I + E + G . where as Y = GDP.

C= Consumer Spending
I = Investment made by industry

E = Excess of Exports over Imports


G = Government Spending

There is a difference between the concept of GDP and GDP per capita even though both serve as a barometer of a nations economic strength. GDP on one hand is defined as the total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment, and government spending, plus the value of exports, minus the value of imports (investorwords.com).

GDP per capita on the other hand is the share of individual members of the population to the annual GDP(nationmaster.com). GDP per capita is computed through dividing the real or nominal value of GDP by the countrys annual total population count, and is often linked by economists with standard of living. Best example that would show the difference between GDP and GDP per capita is through comparison between the economy of China and the US.

In terms of GDP, China and U.S. are close with each other. However in terms of GDP per capita, China falls way behind the U.S. which is due to the great difference in number of population among the two countries.

% CHANGE in GDP Per Capita


9 8 7 In Percentage 6 5

4 3
2 1 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 % CHANGE 2.29 3.53 2.16 6.76 6.74 7.83 7.77 8.35 3.53 7.65 7.35 0

SOURCE:Tradingeconomies.com

INDIAN POPULATION (in millions of people)

1250 Millions of people 1200 1150 1100 1050 1000 950 900 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

2010

years

% change in population
6 5 % Change In Population 4 3 % change in population 2

1 0

Years

10 9 8 7 6 5 4 3 2 1 % change in GDP Per Capita % in change in population

Linear (% change in GDP Per Capita )


Linear (% in change in population)

Reasons For Change in GDP Per Capita From 2000-2010

The reduction of overall growth rate of GDP to 6 per cent in 2000-01 is mainly due to a decline in the growth rate of service sector from 9.6 per cent in 19992000 to 8.3 per cent in the 2000-01

The overall growth of 5.4 percent in 2001-02 is supported by a growth rate of 5.7 percent in agriculture and allied sectors, 3.3 percent in industry and 6.5 percent in services. The acceleration of the overall GDP growth rate is basically due to a significant improvement in value added in the agriculture and allied sectors from a negative growth rate of (-) 0.2 percent in 2000-01 to 5.7 per cent in 2001-2002.

The reduction of overall growth rate of GDP to 6 per cent in 2000-01 is mainly due to a decline in the growth rate of service sector from 9.6 per cent in 19992000 to 8.3 per cent in the 2000-01

In 2003-04 India Per Capita Income was Rs 20989. India's GDP grew 8.5 per cent in the financial year 2003-04 with 7.3 per cent growth in the manufacturing sector and over 10 per cent in agriculture also growth with hotel and transport sector clocking a double digit growth of 11.2 per cent in 2003-04 from seven per cent in 2002-03.

Per Capita Income in India was Rs 23241 in 2004-05. The GDP growth for 2004-05 was revised upwards to 7.5 per cent as against the earlier estimate of 6.9 per cent by CSO. The slowdown in GDP growth during 2004-05 was largely due to a sharp decline in agriculture. The farm sector grew by only 0.7 per cent during the year as compared to 10 per cent in 2003-04.

India's GDP stands revised up to 9 per cent from the previous estimates of 8.4 per cent in 2005-06 the revision has had an effect on the growth in the agriculture sector, which is now shown at six per cent Manufacturing is shown a shade better at 9.1 per cent as against the previous figure of 9 per cent. With the revision in the figures by the Central Statistical Organisation, the GDP growth shows a significant improvement for the previous financial year over 2004-05

Recording another year of impressive performance, the economy grew by 9.6 per cent during 2006-07, leading to over 14 per cent increase in the per capital income, While agriculture sector grew by 3.8 per cent, down from 6.1 per cent, manufacturing sector recorded 12 per cent growth, which is substantially higher than 9.1 per cent growth recorded in the previous year.

Agriculture sector lifted Indias economic growth to 9% in 2007-08 from the earlier projection of 8.7%. This will be the third year in a row, when the Indian economy grew at the rate of 9% and above.

Braving the global recessionary trends, India managed 6.7 per cent economic growth in 2008-09 despite the manufacturing sector recording a dismal performance at a time when most developed economies have shrunk, puts India among the top-most growing nations.

Indian GDP was 7.4 percent during fiscal year 2009-2010, which ended at March 31, 2010, against earlier forecast of 7.2 percent by Indian Ministry of Statistics and Program Implementation. The government said the brisk performance of agriculture, forestry and fishing, mining and quarrying as well as manufacturing sectors.

The Indian economy grew at its slowest pace in more than two years at the end of 2011 as high inflation and the euro-zone debt crisis weighed on the economy, but an anticipated recovery to start this year may keep the Indian central bank from lowering interest rates just yet.

Gross domestic product rose 6.1% year-to-year in the

October-December period. The fiscal third-quarter figure was modestly lower than the 6.9% increase in the quarter ended September, as manufacturing and mining output remained weak, the government said Wednesday