Gross State Domestic Product
Also called: GSDP · Topic: National Income Accounting: GDP, GVA and Welfare · NCERT: Beyond NCERT
Meaning
Gross State Domestic Product (GSDP) is the market value of all final goods and services produced within the borders of a state in a year. Final goods are goods meant for end use, not inputs used to make something else. GSDP counts everything produced inside the state, whether the producer lives there or not. "Gross" means depreciation has not been deducted. Depreciation is the yearly allowance for wear and tear of machines and buildings. GSDP is the state-level version of GDP. It shows how big a state's economy is, and many fiscal rules are set as a share of it.
Example
The 16th Finance Commission (2026-27 to 2030-31) asks States to keep their fiscal deficit (borrowing in a year) within 3% of GSDP. So a State with a GSDP of ₹10 lakh crore may borrow up to about ₹30,000 crore that year. Capital spending is also judged against GSDP. In 2023-24, all States together spent about 2.7% of GSDP on capex.
Don't confuse with
- Net State Domestic Product (NSDP): NSDP = GSDP − depreciation. Per capita NSDP, not GSDP, is used as a state's per capita income.
- Gross Domestic Product (GDP): GDP measures output within the whole country's domestic territory. GSDP measures output within one state only.