Real growth rate
Also called: Real GDP growth rate · Topic: National Income Accounting: GDP, GVA and Welfare · NCERT: Class 11, Ch 4 "Presentation of Data"
Meaning
The real growth rate is the percentage change in real GDP (GDP at constant base-year prices) compared with the previous year. Price changes are removed, so it shows only the change in the amount actually produced. It is the standard measure of economic growth.
Real growth rate = (Real GDP this year − Real GDP last year) ÷ Real GDP last year × 100
India also reports it for each sector (agriculture and allied, industry, and services) using real GVA (gross value added, meaning the value each producer adds).
Example
Bread output rises from 100 to 110 loaves while the price rises from ₹10 to ₹15. Real GDP at 2000 prices goes from ₹1,000 to ₹1,100, so the real growth rate is 10%. Nominal GDP rose by 65%, but most of that was higher prices.
Don't confuse with
- Nominal growth rate: this is the growth in GDP at current prices, so it includes inflation. A rule of thumb: nominal growth ≈ real growth + inflation measured by the GDP deflator (nominal GDP ÷ real GDP).