• Non marketed items: GDP ignores transactions that do not take place in organized markets. For example, the services performed in the home. such as cleaning, cooking, child care, painting of houses by the residents themselves etc., go unrecorded. GDP statistics, thus, understate the true level of production in the country.

• Ignores the underground economy: There are certain economic activities that should have been included in the GDP account but they are not shown up because the activity is either illegal or unreported. For instance, a teacher doing tuition work at home but does not declare income to evade taxes. The waiters and waitresses do not report all their tips to avoid paying tax. The profits of illegal trade such as drugs sale etc. also go unrecorded.

• Human cost of productions: If GDP increases as a result of people having to work for longer hours and in unhygienic conditions, its net benefit will be less to the citizens of a country.

• GDP ignores externalizes: When there is industrial growth in the country, its side effects such as pollution of air, water etc., are not taken into account.