sale of petrol and diesel cars …

As per the expenditure method of computing Gross Domestic Product, the following expenditure are added:

1. Private final consumption expenditure, which includes total expenditure on final goods and services by individuals and households.
2. Government final consumption expenditure, which includes the expenditure incurred by the government on final goods and services.
3. Gross domestic capital formation, which includes the investment made by the firms on capital goods.
4. Net exports which is the excess of exports over imports.

As the sale of petrol and diesel cars rises, it implies that private consumption expenditure is also rising. A rise in private consumption expenditure leads to a rise in the Gross Domestic Product. So, an increase in the sale of petrol and diesel cars will lead to an increase in the Gross Domestic Product of the country. However, it will not lead to an increase in the welfare of the people because of the below-mentioned reasons.

1. As the sale of petrol and diesel cars rise, then the level of pollution will also rise m the big cities.
2. With a rise in the number of cars, the traffic congestion on the roads will worsen.
3. A rise in the number of cars will increase the demand for petrol and diesel. This will lead to a rise in the prices of petrol and diesel.
4. The already depleted reserves of petrol and diesel will be subjected to further depletion.