Expenditure and income methods; prices

Expenditure method: GDP = the total final spending on the economy's output:

GDP = C + I + G + X − M

where C is household consumption, I is investment by firms, G is government spending, X is exports and M is imports. (X − M is net exports; imports are subtracted because they were produced abroad.) Spending on intermediate goods is not included. Of these parts, investment is the most unstable.

Income method: GDP = the total factor payments:

GDP = W + P + In + R (wages, profits, interest, rent).

Example: a spinner makes yarn worth ₹40 and sells it to a weaver, who makes a shawl worth ₹150. Value added = 40 + 110 = 150; final spending = ₹150 (the shawl); and if wages are ₹60, profits, interest and rent make up the other ₹90. Three roads, one GDP.

Prices: GDP can be valued at different prices.

• GVA at factor cost + net production taxes (production taxes − production subsidies, like land revenue) = GVA at basic prices.
• GVA at basic prices + net product taxes (taxes on each unit sold, such as GST, minus product subsidies) = GVA at market prices.

Since 2015, India's statistics office (the CSO) highlights GVA at basic prices, and GDP.