Nominal vs. Real GDP
Understanding the Difference
A recurring Prelims concept is the distinction between nominal and real GDP, and how the GDP deflator works.
- Real GDP: Measured at constant base year prices — strips out inflation to show actual volume growth.
- Nominal GDP: Measured at current market prices — includes inflation. When nominal GDP grows faster than real GDP, the gap reflects the GDP deflator (a broad measure of economy-wide price change).
- GDP Deflator = (Nominal GDP / Real GDP) × 100. Unlike CPI or WPI, it covers all goods and services in the economy, not a fixed basket.
- In Q3 FY26: Real GDP growth = 7.8%; Full-year FY26 nominal GDP growth = 8.6%, real GDP growth = 7.6% — implying a GDP deflator of roughly 0.9% for the full year, indicating muted inflation at the economy-wide level.
- India's GDP deflator has historically been volatile due to swings in commodity prices (oil, food).
● Tracked since February 28, 2026 · last seen April 17, 2026 · updates as the daily brief publishes
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