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Counting Total production (1. Counting Goods & Workers (It is…
Counting Total production
2. Calculation of GDP in India
This mammoth task is taken up by the Central government ministry
They take the help of the different government departments of all the Indian states & Union Territories
They collect information regarding the total volume of goods & services and their prices and estimates the GDP
1. Counting Goods & Workers
It is important to find 1) the total number of goods & services produced in the three sectors
2) And the number of people working in each sector
This helps in understanding which sector dominates in terms of production & employment
It is next to impossible to count the number of goods & services produced
So economists suggest that the values of goods & services produced should be considered rather than counting the numbers
Also it makes sense to find the value of the final goods & services as intermediate goods are used in producing final goods & services
Eg: Farmer produces wheat (Rs 8/-) --> flour mill to ground wheat (Rs 10) --> biscuit company --> biscuit packets(Rs.60). So it is enough to consider Rs.60
Gross Domestic Product (GDP)
of a country is the value of all the final goods & services produced by all the three sectors in a country for a particular year
GDP is an indication of the size of the economy
The value of the final goods include the value of all the intermediate goods
3.Historical Change in Sectors
During the initial stages of development of a country, primary sector is the most important sector of economic activity
As the agricultural sector prospered, there was plenty of food available and people now took up other activities
There was an increase in number of craftsmen, traders, transporters, administrators, people employed in the army etc
But most of the goods were still natural products from the primary sector & most people were employed in this sector
During the next stage of development, factories came up, industrialization began
People who had worked in farms, began to work in factories in large numbers
Goods were produced in factories at cheap rates and secondary sector became the most important in total production & employment
In the past 100 years, there has been a further shift from secondary sector to tertiary sector in the developed countries
Service sector became the most important in terms of production & employment in developed countries