The Gross Value Added (GVA) and Gross Domestic Product (GDP) give a picture of economic activity from producers (supply side) and consumers (demand side) perspectives respectively. Both GDP and GVA are independent measures. One from demand side and other from supply side.

• GDP or Gross domestic product of a country is the final value of goods and services for a given period, while gross value added is a metric capturing the value generated by subtracting the input costs.
• GVA or Gross value added is a productivity metric that measures the contribution to an economy, producer, sector or region. Gross value added provides a dollar value for the amount of goods and services that have been produced, less the cost of all inputs and raw materials that are directly attributable to that production.

1. GVA provides better measure of economic activity. Because GDP can record a sharp increase just on the account of increased tax collections due to better compliance/coverage and not necessarily due to increase in output.
2. GVA is a better reflection of the productivity of the producers as it excludes the indirect taxes which could distort the production process. However, it can also be argued that GVA is distorted due to presence of subsidies.
3. A sector-wise breakdown provided by the GVA measure can better help the policymakers to decide which sectors need incentives/ stimulus or vice versa.

Both of the measures need not match and there could be a sharp divergence due to presence of Net Indirect Taxes ( NIT= indirect taxes-subsidies) which are accounted in GDP calculations (GDP is sum of GVA and NIT).

There has been differences among economists regarding usefulness of these 2 metrics, and the recent change in methodology of GDP calculation has again stoked debates. Some of the observations are:

1. GDP is more suitable when we went an overview of economy and for comparison purposes, while GVA is more suitable for fishing sectoral performances
2. GDP could be increased by inflators pressures while GVA is relatively insulated from it.
3. GVA can give insights about the structural bottlenecks of economy.

Thus, both metrics have their own utility and economists need to apply their judgement in ascertaining suitability on case to case basis.

GVA carries significance as a better indicator of real economic activity, reflective of productivity/ competitiveness and useful in sector specific policymaking. GDP remains a key measure to make cross country analysis and comparing the incomes of different economies.

After the global financial crisis of 2008 countries shifted towards GDP as indicator and india towards GDP at factor cost. Develop countries calculate GDP at market price because of lower tax rates. However, india shifted to GDP at market price or GVA for growth estimation in 2015 as to comply global practices. Since a decade india's indirect tax collection is growing and subsidies share going down so to account for this increase to be felt in growth prospects india drifted towards GVA.

As-> GVA=GDP+tax-subsidy, thus increasing the value of goods and services produced.

New GDP estimation was made to account for new products to be added like smart phones etc. and change the base year or constant year to more of current year to account for inflationary tendencies i.e from 2004-05 to 2011-12 which in whole brought a wave of positivity in market which is required for igniting investment and growth prospects