GDP contribution of different sectors:  Agriculture, Industry, Services

Gross domestic product (GDP) is the total value of the goods and services produced in a country during a specific period, usually a year. There are three methods to calculate GDP. These methods are:

The Output Method (all value added by each producer),

The Income Method (all income generated) and.

The Expenditure Method (all spending).

The (production) output method for determining GDP takes into account the total output produced by a country minus the goods consumed in the process.

The income method measures GDP by adding together: The Gross Profit of companies and the Self-Employed, plus the wages of employees (Compensation of Employees). Plus all Taxes on Products.

The formula for the Expenditure Method is GDP = C + I + G+ NX.

Where ‘C’ is the consumption expenditure, ‘G’ is the government expenditure, ‘I’ is the investment, and ‘NX’ is the net exports.

If the data measurement is perfect, all three would give you the same result. However, the differences between these methods may lead to variations in GDP figures.

The problem is that different countries have data sources that enable them to use one or maybe two at most of these three approaches. In our case, INDIA relies on the production approach because that’s where the data is the best.

India’s GDP is calculated using two distinct methods: Economic activity (at factor cost) and Expenditure (at market prices).

The factor cost method assesses the performance of eight different industries. The following eight industry sectors are considered in this cost:

Agriculture, forestry, and fishing,

Mining and quarrying,

Manufacturing,

Electricity, gas, water supply, and other utility services,

Construction,

Trade, hotels, transport, communication, and broadcasting,

Financial, real estate, and professional services,

Public administration, defense, and other services

The expenditure-based method indicates how different areas of the economy are performing, such as trade, investments, and personal consumption.

India’s GDP is calculated using two distinct methods: Economic activity (at factor cost) and Expenditure (at market prices).

The factor cost method assesses the performance of eight different industries. The following eight industry sectors are considered in this cost:

Agriculture, forestry, and fishing,

Mining and quarrying,

Manufacturing,

Electricity, gas, water supply, and other utility services,

Construction,

Trade, hotels, transport, communication, and broadcasting,

Financial, real estate, and professional services,

Public administration, defense, and other services

The contribution of different sectors to the GDP of India in 2022-23 was as follows:

The services sector is the largest in India. Gross Value Added (GVA) at current prices for the services sector is estimated at 131.96 lakh crore INR in 2022-23. The services sector accounts for 53.33% of total India’s GVA of 247.43 lakh crore Indian rupees. With a GVA of Rs. 69.89 lakh crore, the Industry sector contributes 28.25%. While Agriculture and allied sectors share 18.42%.

Industry GDP of 28.25% comprises mining & quarrying at 2.36%, Manufacturing at 14.7%, electricity, gas, water and other utilities at 3%, and construction at 8.19%.

Services GDP of 53.34% comprises financial, real estate, and professional services:21.42%  and Trade, hotels, transport, communication, and service related to broadcasting 17.98%, GVA  public administration defence and other services 13.94%.

The Share of agriculture in India’s GDP declined to 18.42 per cent last fiscal year from 35 per cent in 1990-91 due to rapid growth in the industrial and service sector, the government informed on Tuesday. “The share of agriculture in total Gross Value Added (GVA) of the economy has declined from 35% in 1990-91 to 15% in 2022-23. With a GVA of Rs. 69.89 lakh crore, the Industry sector (comprising of manufacturing, electricity, gas, water supply & other utility services, and construction) contributes 28.25%. While Agriculture and allied sectors (comprising manufacturing, electricity, gas, water supply & other utility services, and construction) share 18.42%. (At 2011-12 prices, the Agriculture & allied, Industry, and Services sector’s composition is 15.13%, 30.67%, and 54.20%, respectively).

The Agriculture sector’s contribution to the Indian economy is much higher than the world’s average (6.4%). The industry and services sector’s contribution is lower than the world’s average of 30% for the Industry sector and 63% for the Services sector.

Source: Ministry of Statistics and programe implementation.

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