Gross State Domestic Product

Gross State Domestic Product

Subject: Economy

Section: National Income

Context: Emerging from the shock of the Covid-19 pandemic, economies of 19 states and Union Territories exceeded their pre-Covid levels according to the Ministry of Statistics and Programme Implementation.

Details:

• In 2021-22, India’s GDP expanded at 8.7 per cent against a 6.6 per cent contraction in 2020-21.
• The Gross State Domestic Product (GSDP) of the 19 states and UTs had contracted or recorded a negligible growth during 2020-21 while their economies bounced back and exceeded their pre-Covid (2019-20) levels in 2021-22.
• Kerala and Uttar Pradesh are the only exceptions with their GSDP continuing to remain below the pre-Covid levels.

Causes of growth:

• Base effect-
  • It refers to the impact of an increase in the growth rate (i.e. previous year’s growth) over the corresponding rise in growth rate in the current year (i.e., current growth).
• Post pandemic recovery 

Concept:

• The Ministry of Statistics and Programme Implementation compiles the GSDP figures as reported by the Directorate of Economics & Statistics of respective state governments.
• Compilation of GSDP is similar to that of compiling GDP of the entire economy i.e. measuring the volume in monetary terms, the total value of goods and services produced within the geographical boundary of the state.
• GSDP is the sum total of value added by different economic sectors (Agriculture, Industry & Services) produced within the boundaries of the state calculated without duplication during a year.
• From Gross State Domestic Product (GSDP), the Consumption of Fixed Capitals (CFC) is deducted to arrive at Net State Domestic Product i.e. NSDP = GSDP – CFC
  •  Consumption of Fixed Capital (CFC) is the value of fixed capital which is consumed during the process of production. It is calculated on the basis of life span of the fixed asset.
• GSDP at Current Price and Constant Price
  • GSDP estimated for an accounting year is measured at current price is known as GSDP at current price.
  • It is necessary to eliminate the effect of price inflation to compare the production over the years.  This is done by calculating the value of GSDP at a particular base year price. The GSDP thus obtained is known as GSDP at constant prices. This gives a measure of the real growth of the economy.
• GSDP at Factor cost-Sector wise GVA estimates is known as GSDP at Factor Cost. No taxes and subsidies are taken into consideration while calculating individual GVA.
• GSDP at Basic Price-GSDP at factor cost + Production Tax – Production Subsidies = GSDP at Basic Price
• GSDP at Market Price-GSDP at Basic Price + Product Tax – Product Subsidies = GSDP at Market Price.
  • For calculation of rate of Fiscal Deficit to Total GSDP, The GSDP at Market Price is the denominator factor.

Importance of State Domestic Product

• The State Domestic Product (SDP) or State Income is the most important indicator for measuring the economic growth of a State. 
  • These estimates of the economy, over a period of time, reveal the extent and direction of the changes in the levels of economic development. 
• The State Domestic Product is classified under three broad sectors such as Primary sector, Secondary sector and Tertiary sector and is compiled economic activity wise as per the methodology prescribed by the Central Statistics Office (CSO)  and furnished to the Ministry of Statistics and Programme Implementation (MOSPI).
• It throws light on the overall impact of various developmental programmes implemented by the Government and helps in inter-state comparison.
• The Finance Department prepares a macroeconomic framework statement and fiscal policy statement, every year, using the SDP estimates for placing before the Legislature during Budget Sessions as part of Fiscal Responsibility and Budget Management (FRBM) Act, 2005.

Richest and poorest states in India by GDP

Maharashtra has the highest GSDP among 33 Indian States and Union Territories. As of the FY 2018-19, Maharashtra contributes 13.88% of India’s GDP at current prices, followed by Tamil Nadu (8.59%) and the most populous state Uttar Pradesh (8.35%). Other states in top 5 are Gujarat (7.92%)and Karnataka (7.87%).

India’s largest state Rajasthan is at number 7, behind West Bengal, poorest state Bihar is at number 14, and capital Delhi is at number 12.

The top 5 states share 46.6% of India’s total economy. Five states of South India together account for close to 30%. Eight states of North-East India share 2.8%.

Andaman & Nicobar Islands has the lowest GSDP in the list of 33 states/UTs. Followed by Mizoram, Arunachal Pradesh, Nagaland, and Manipur.

Rank I State/Union Territory I Nominal GDP ₹ lakh crore = INR trillions

1 Maharashtra ₹28.18 lakh crore (US$400 billion) 2019-20

2 Tamil Nadu ₹19.43 lakh crore (US$270 billion) 2020–21[3]

3 Uttar Pradesh ₹17.05 lakh crore (US$240 billion) 2020–21[3]

4 Karnataka ₹16.65 lakh crore (US$230 billion) 2020–21

5 Gujarat ₹16.49 lakh crore (US$230 billion) 2019–20

6 West Bengal ₹12.54 lakh crore (US$180 billion) 2019–20

7 Telangana ₹9.78 lakh crore (US$140 billion) 2020–21

8 Andhra Pradesh ₹9.71 lakh crore (US$140 billion) 2019–20

9 Rajasthan ₹9.58 lakh crore (US$130 billion) 2020–21

10 Madhya Pradesh ₹9.17 lakh crore (US$130 billion) 2020–21

11 Kerala ₹8.54 lakh crore (US$120 billion) 2019–20

12 Delhi ₹7.98 lakh crore (US$110 billion) 2020–21

13 Haryana ₹7.65 lakh crore (US$110 billion) 2020–21

14 Bihar ₹6.12 lakh crore (US$86 billion) 2019–20

15 Punjab ₹5.41 lakh crore (US$76 billion) 2020–21

16 Odisha ₹5.09 lakh crore (US$71 billion) 2020–21

17 Assam ₹3.51 lakh crore (US$49 billion) 2019–20

18 Chhattisgarh ₹3.50 lakh crore (US$49 billion) 2020–21

19 Jharkhand ₹3.29 lakh crore (US$46 billion) 2019–20

20 Uttarakhand ₹2.53 lakh crore (US$35 billion) 2019–20

21 Jammu and Kashmir ₹1.76 lakh crore (US$25 billion) 2020–21

22 Himachal Pradesh ₹1.56 lakh crore (US$22 billion) 2020–21

23 Goa ₹0.815 lakh crore (US$11 billion) 2020–21

24 Tripura ₹0.597 lakh crore (US$8.4 billion) 2020–21

25 Chandigarh ₹0.421 lakh crore (US$5.9 billion) 2018–19

26 Puducherry ₹0.380 lakh crore (US$5.3 billion) 2019–20

27 Meghalaya ₹0.348 lakh crore (US$4.9 billion) 2020–21

28 Sikkim ₹0.325 lakh crore (US$4.6 billion) 2019–20

29 Nagaland ₹0.319 lakh crore (US$4.5 billion) 2019–20

30 Manipur ₹0.318 lakh crore (US$4.5 billion) 2019–20

31 Arunachal Pradesh ₹0.273 lakh crore (US$3.8 billion) 2019–20

32 Mizoram ₹0.265 lakh crore (US$3.7 billion) 2019–20

33 Andaman and Nicobar Islands ₹0.088 lakh crore (US$1.2 billion) 2018–19