New Delhi. You must have read the news that the Indian stock market has crossed $ 5 trillion. On May 21, 2024, the stock market rose above this historic figure for the first time. This means that the valuation of the total companies listed on the Bombay Stock Exchange (BSE) has exceeded $ 5 trillion. A total of 5,309 companies are listed on the BSE. On the other hand, the Modi government has repeatedly said that the Indian economy (GDP) has to be taken beyond $ 5 trillion. In such a situation, people do not need to get confused between these two things. At present, the market cap has crossed $ 5 trillion, not the GDP. $ 5 trillion of the stock market does not mean that the Indian economy has become $ 5 trillion. What is the difference between the two, let us know.
Companies listed in the stock market and the country’s economy are not the same thing. There is a big difference between the two. As you already know, 5,309 companies are listed in BSE. The market cap of some companies is in lakhs of crores, while some companies are worth just a few crores. Companies are divided into three categories according to market cap – large cap, mid cap, and small cap. Here cap means capitalization. The number that comes after adding the market cap of all the companies will be considered the total valuation of the stock market. The news that has come at the moment gives information about this number. Now let’s talk about the economy.
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The Finance Ministry had issued a statement on 29 January 2024. It was said- It is expected that the economy will reach $5 trillion in the next 3 years GDP With this, India will become the third largest economy in the world. One word has been used specifically here – GPD. So to understand the economy it is essential to understand GDP.
The simplest definition of GDP
full form of gdp gross domestic product (Gross Domestic Product). In hindi Gross Domestic Product It is said. Gross domestic product is the monetary value of all finished goods and services produced within a country at a time. This is a bookish definition, which may be a little difficult to understand, but we try to explain it in a slightly simpler way. According to International Monetary Fund (IMF) data, India’s GDP currently stands at $3.94 trillion. This means that in the last financial year, the total value of all goods and services produced in India was 3.94 trillion dollars. This data shows how much value of goods and services a country has the power to produce.
There is a formula to calculate GDP-
Y = C + I + G + (X − M) – Every English letter given here has some meaning.
Y means – GDP
C means – Consumption. This includes spending on services, non-durable goods and durable goods.
I means – Investment. This includes expenditure on housing and equipment.
G means – Government expenditure. This includes expenditure on employee salaries, roads, railways, airports, schools and military.
XM means difference between exports and imports. It is also called Net Exports.
If this formula is written in Hindi, it will be written like this-
gross domestic product = Consumption + Investment + Government Spending + Net Exports
What is its importance?
This is an important indicator of the country’s progress. It shows how much a country is producing and how much its people are able to spend. It gives complete details of all economic activities within the country. On the basis of this detail, the condition of the economy is assessed and on this basis governments make policies for the citizens. The higher the GPD of a country, the more advanced and better that country is considered.
Tags: BSE Sensex, business news, gdp growth, Indian economy, India GDP, Indian economy, stock market
FIRST PUBLISHED: May 22, 2024, 18:10 IST