Expert Committee Submits its Report on Determining Methodology for Fixing National Minimum Wage, Ministry of Labour and Employment Click here

GDP deflator

From Arthapedia
(Difference between revisions)
Jump to: navigation, search
(Created page with "When goods are exported to another country at a price which is less than what it is sold for in the home country or when the export price is less than the cost of production in t...")
 
(→Contributed by)
 
(One intermediate revision by one user not shown)
Line 1: Line 1:
−
When goods are exported to another country at a price which is less than what it is sold for in the home country or when the export price is less than the cost of production in the home country, then those goods have been dumped.  
+
<p>The&nbsp;Gross  Domestic Product (GDP) deflator&nbsp;is  a measure of general price inflation. It is calculated by dividing  nominal&nbsp;GDP&nbsp;by  real&nbsp;GDP&nbsp;and then  multiplying by 100. Nominal GDP&nbsp;is the market value of goods and services produced in an economy, unadjusted for inflation  (It is the GDP measured at current prices). Real&nbsp;GDP&nbsp;is nominal&nbsp;GDP,  adjusted for inflation to reflect changes in real output (It is the GDP  measured at constant prices).</p>
 +
<p>GDP  Deflator             =          <u>Nominal  GDP</u>  x 100<br>
 +
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Real  GDP</p>
 +
<p>
 +
  <strong>Importance of GDP Deflator </strong><br> 
 +
  There  are other measures of inflation too like [http://arthapedia.in/index.php?title=Consumer_Price_Index Consumer  Price Index] (CPI) and [http://arthapedia.in/index.php?title=Headline_inflation Wholesale  Price Index (or WPI)]; however GDP deflator is a much broader  and comprehensive measure. Since Gross Domestic Product is an aggregate measure  of production, being the sum of all final uses of goods and services (less imports), GDP deflator reflects  the prices of all domestically produced goods and services in the economy  whereas, other measures like CPI and WPI are based on a limited basket of goods and services, thereby not representing the entire economy (the basket of goods  is changed to accommodate changes in consumption patterns, but after a  considerable period of time). Another important distinction is that the basket  of WPI (at present) has no representation of services sector. The GDP deflator  also includes the prices of investment goods, government services and exports,  and excludes the price of imports. Changes in consumption patterns or the introduction of new  goods and services or structural transformation are automatically reflected in  the deflator which is not the case with other inflation measures. <br>
 +
  However WPI and CPI are available on monthly basis whereas deflator  comes with a lag (yearly or quarterly, after quarterly GDP data is released).  Hence, monthly change in inflation cannot be tracked using GDP deflator, limiting  its usefulness. </p>
 +
<p><br>
 +
  <strong>Statistics </strong><br> 
 +
  Ministry of Statistics and Programme Implementation (MOSPI) comes  out with GDP deflator in National Accounts Statistics as price indices. The  base of the GDP deflator is revised when base of GDP series is changed. The  latest available GDP deflator series with 2004-05 may be seen [http://mospi.nic.in/mospi_new/upload/brochure_%202004-05.pdf here]. </p>
  
−
Home Market Price – Export Sales Price =  Margin of dumping
 
  
−
The Department of Commerce in the Union Ministry of Commerce and Industry has an Anti-dumping Unit which investigates cases where the domestic industry (domestic producers) provide evidence that dumping has taken place by producers abroad. They also defend cases where allegations of dumping are brought against Indian exporters by foreign governments.
 
  
−
There is a well established process which is followed where questionnaires are sent to all stakeholders and evidence is collected in a time-bound fashion to either prove or disprove that dumping has taken place.
 
  
−
If the good is alleged to be dumped from a non-market country ( a country where there are considerable distortions to the market through government subsidies ) then the Anti –dumping cell will calculate what the “normal” price of the product should be in the home market. The normal price will reflect the market price of the product had it been produced in the exporting country without these subsidies. If necessary, the price of such a commodity in a similar market ( say a neighbouring country at the same level of development as the exporting country) will be considered as the normal price.  
+
==Further References==
 +
#[https://www.gov.uk/government/statistics/gdp-deflators-at-market-prices-and-money-gdp-march-2013 User  Guide for GDP deflators published by Government of UK]
 +
#[http://www.bea.gov/faq/index.cfm?faq_id=513 FAQ of Bureau of Economic Analysis], US Department of Commerce
 +
#[http://rbidocs.rbi.org.in/rdocs/Speeches/PDFs/IAEDF140110.pdf Measures  of Inflation in India: Issues and Perspectives] by Deepak Mohanty, Executive  Director RBI
  
−
If there is evidence of dumping then the Government of India will levy an anti-dumping duty on that commodity for a period of five years and will review the need for continuation of duty thereafter.
 
−
 
−
 
−
==References==
 
−
#http://commerce.nic.in/traderemedies/ad_product.asp?id=10
 
−
#http://commerce.nic.in/traderemedies/ad_guidelines.asp?id=4
 
  
  
 
==Contributed by==
 
==Contributed by==
−
*[http://www.ies.gov.in/myaccount-profile-view.php?memid=128 Dr. Anuradha Balaram, IES (1986)]
+
*[http://ies.gov.in/myaccount-profile-view.php?memid=479 Aakanksha Arora (IES 2013)]
−
*Email- [mailto:pabalaram@hotmail.com pabalaram@hotmail.com]
+
*Email- [mailto:aakanksha.arora20@gmail.com aakanksha.arora20@gmail.com]
  
−
[[Category:concepts|DUMPING]]
+
[[Category:concepts|GDPdeflator]]

Latest revision as of 10:26, 23 July 2015

The Gross Domestic Product (GDP) deflator is a measure of general price inflation. It is calculated by dividing nominal GDP by real GDP and then multiplying by 100. Nominal GDP is the market value of goods and services produced in an economy, unadjusted for inflation (It is the GDP measured at current prices). Real GDP is nominal GDP, adjusted for inflation to reflect changes in real output (It is the GDP measured at constant prices).

GDP Deflator             =          Nominal GDP  x 100
                                                 Real GDP

Importance of GDP Deflator
There are other measures of inflation too like Consumer Price Index (CPI) and Wholesale Price Index (or WPI); however GDP deflator is a much broader and comprehensive measure. Since Gross Domestic Product is an aggregate measure of production, being the sum of all final uses of goods and services (less imports), GDP deflator reflects the prices of all domestically produced goods and services in the economy whereas, other measures like CPI and WPI are based on a limited basket of goods and services, thereby not representing the entire economy (the basket of goods is changed to accommodate changes in consumption patterns, but after a considerable period of time). Another important distinction is that the basket of WPI (at present) has no representation of services sector. The GDP deflator also includes the prices of investment goods, government services and exports, and excludes the price of imports. Changes in consumption patterns or the introduction of new goods and services or structural transformation are automatically reflected in the deflator which is not the case with other inflation measures.
However WPI and CPI are available on monthly basis whereas deflator comes with a lag (yearly or quarterly, after quarterly GDP data is released). Hence, monthly change in inflation cannot be tracked using GDP deflator, limiting its usefulness.


Statistics
Ministry of Statistics and Programme Implementation (MOSPI) comes out with GDP deflator in National Accounts Statistics as price indices. The base of the GDP deflator is revised when base of GDP series is changed. The latest available GDP deflator series with 2004-05 may be seen here.



Further References

  1. User Guide for GDP deflators published by Government of UK
  2. FAQ of Bureau of Economic Analysis, US Department of Commerce
  3. Measures of Inflation in India: Issues and Perspectives by Deepak Mohanty, Executive Director RBI


Contributed by

Retrieved from "http://www.arthapedia.in/index.php/GDP_deflator"
Personal tools
Variants
Actions
Navigation
Concepts
Share Tools
Toolbox
Translate