Gross domestic product

The total value of goods and services produced in an economy over a period.

Take an economy growing from ₹300 lakh crore to ₹320 lakh crore. It has grown 6.7% in nominal terms, and real growth is roughly that figure less the GDP deflator, the price index for everything the economy produces, and not consumer price inflation.

GDP can be built three ways: from production, from expenditure, from income. All three should agree. Where they don't, the gap is a statistical discrepancy that is itself informative in emerging economies.

For company analysis its use is narrow, but it's real. Most consumer categories grow at some multiple of nominal economic growth, and if your forecast implies otherwise for a long period, you'll need an argument for it.

For a company analyst the expenditure decomposition is the most useful, because it names the demand a business actually sells into. Private consumption and government spending each drive different sectors, as do gross fixed capital formation and net exports, and the four don't move together. A cement maker cares about capital formation and about government infrastructure spending; a consumer staples company cares about private consumption and about rural incomes within it. Reading the composition turns a macro number into something a sector forecast can use. On its own, the headline doesn't.

It measures output. Activity is something else, and the distinction matters.