What is purchasing power parity or GDP in simple terms ? - Although India is the fourth largest economy on the basis of GDP(PPP) but on the basis of per capita its rank is 133? Is it due to large population of India ? - So how is overall GDP and per capital GDP useful ?
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Purchasing Power Parity or PPP compares different countries' currencies through 'a basket of goods' approach. Therefore, a basket of identical goods purchased in two different countries, for instance, would help compare the two country's currencies.
Gross Domestic Product or GDP is one of the prime indicators for economists to gauge the economic health of a country. It is simply defined as the total value of all goods and services during a defined period. For the comparison of GDP between countries, today they must ideally be PPP adjusted.
India is a big country with a commensurately large industrial base, hence its GDP is high enough to rank the country as the fourth largest economy in the world. However, India has the second biggest population in the world too; hence, its per capita GDP is pretty low and the country ranks 133rd on this scale.
Both per capita GDP and GDP are important to judge the country. It implies the country is doing pretty well on the whole, while the average Indian continues to remain poor. The financial health of the individual can improve by controlling the birthrate and at the same time ensuring equitable distribution of wealth.
Gross Domestic Product or GDP is one of the prime indicators for economists to gauge the economic health of a country. It is simply defined as the total value of all goods and services during a defined period. For the comparison of GDP between countries, today they must ideally be PPP adjusted.
India is a big country with a commensurately large industrial base, hence its GDP is high enough to rank the country as the fourth largest economy in the world. However, India has the second biggest population in the world too; hence, its per capita GDP is pretty low and the country ranks 133rd on this scale.
Both per capita GDP and GDP are important to judge the country. It implies the country is doing pretty well on the whole, while the average Indian continues to remain poor. The financial health of the individual can improve by controlling the birthrate and at the same time ensuring equitable distribution of wealth.
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