GDP Calculation Methodology by NSO.

NSO calculates GDP by Value Added Method and Expenditure Method both. Under Value Added Method, it calculates the value addition done by various economic activities viz:

 Agriculture, Forestry and Fishing.

 Mining and Quarrying.

 Manufacturing.

 Electricity, Gas, water supply and other utility services.

 Construction.

 Trade, Hotels and transport, and communication and services related to 

broadcasting.

 Financial, Insurance, real estate and professional services.

 Public administration and defence and other services.

     👉 Under Expenditure Method, it adds up the various components of expenditure viz:👇

 Private Final Consumption Expenditure (it is basically household expenditure)

 Government Final Consumption Expenditure

 Gross Fixed Capital Formation (Investment expenditure of private and government)

 Net of Exports and Imports

(In certain cases where we are not able to measure estimates at constant prices, then the CPI 

and WPI index is used as deflators).

Though GDP measured from either side should be equal, since reliable data is not available 

for private consumption expenditure, there is always a difference in the two ways of 

measuring GDP. The difference is usually put as “discrepancies” in the expenditure 

approach of measuring GDP.