GDP and Common Man

 

 
 How does common man contribute to GDP?

In simple terms, GDP is the estimated value of Goods and services produced in a country for a particular time frame. We can say that the economic growth of a country directly depends on its GDP. Higher the GDP, higher is its economic growth.

In this COVID-19 pandemic time GDP of this country is continuously decreasing. This leads to slow economic growth & decreased per ca pita income. So, we must understand how GDP is related to Economic growth contribution of common man in it. Let me explain with an example.

I am a private sector employee. Before pandemic, my overall monthly expenditure was Rs 25000. This was my indirect investment in the market. My expenditure was in form of paying rent, bills, outdoor dining, movie theater, snacks & tea shops, regular consumable goods, vehicle fuel, outdoor hangout with friends, etc. But now I am leaving in this pandemic time. My overall expenditure was cut short to around Rs 18000. Now this is my indirect investment in the market. As we all are aware of the reason. Due to pandemic I must close my outdoor activities like outdoor dining, hangout with friends, movie theater, vehicle fuel, etc. This leads to no investment on these activities. In a way I saved Rs 7000 but in other way, market lost Rs 7000. This is loss of 28 percent of my expenditure for market.

Taking consideration of the entire population of this country, the loss for market is too huge. The less investment by people leads to low demand of goods which in result depreciates the production.

Now a company with low production will require lower number of employees. Thus, few or more employees will be fired leading to no source of stable income for some of them. This on exponential condition will lead to recession.

A common man contribution to market has huge impact on GDP and economic growth of a country.

 

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