How has the structure of India’s GDP changed over the years?
GDP composition
GDP can be determined in three ways, all of which should, in principle, give the same result. They are the production (or output) approach, the income approach, and the expenditure approach. The expenditure approach is summarized in the formula: GDP = C (private consumption) + I (Investment) + G (public consumption) + X (export of goods and services) – M (import of goods and services).
The production approach measures the market value of all final goods and services calculated during the period. It sums up value add of each production process to avoid double counting. The value-added shares presented in the World Development Indicators for agriculture, industry, and services may not always add up to a hundred percent due to FISIM and net indirect taxes.
India’s GDP composition
India’s economy is traditionally service-based, relying a lot on domestic demand. Service accounts for almost half of GDP in 2017, while the share of agriculture has been continuously decreasing over the past 40 years. On the expenditure side, India’s economy still relies a lot on domestic demand despite a recent increase in the share of Export.
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