Gross Domestic Product (GDP)

The gross domestic product (GDP) is the primary indicator used to gauge the health of a country's economy. The GDP of a country is defined as the market value of all final goods and services produced within a country in a given period of time - you can think of it as the size of the economy. Usually, GDP is expressed as a comparison to the previous quarter or year. For example, if the year-to-year GDP was up 3%, it means that the economy has grown by 3% over the last year.

The monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory.

GDP = C (consumption) + G (government spending) + I (investment) + NX (net exports)

Where:

"C" is equal to sum of expenditures by households on durable goods, nondurable goods, and services. Examples include clothing, food, and health care.
"G" is the sum of expenditures by all government bodies on goods and services. Examples include naval ships and salaries to government employees.
"I" is the sum of all the country's businesses spending on capital. Examples include machinery, unsold products, and housing.
"NX" is the nation's total net exports, calculated as total exports minus total imports. (NX = Exports - Imports)

India's GDP recently (2007) crossed the trillion-dollar mark for the first time and with this India has joined the elite club of 12 countries with a trillion dollar economy. Countries that have breached trillion-dollar GDP level in the past are the US, Japan, Germany, China, UK, France, Italy, Spain, Canada, Brazil and Russia.