India’s GDP estimated to grow by 7.3%: NSO data
Context:
The National Statistical Office (NSO) has released the preliminary advance estimates for India’s national income in the fiscal year 2023-24. These projections, instrumental in formulating the Union Budget, indicate an anticipated real GDP growth of 7.3%. This figure subtly surpasses the recent forecast by the Reserve Bank of India, which predicted a 7% increase. The unveiling of these estimates holds significance as they set the tone for economic expectations and policy considerations.
Relevance:
GS-03 (Economy)
Key Highlights:
- GDP Growth Projection: The NSO forecasts India’s real GDP growth for 2023-24 at 7.3%, surpassing the previous year’s 7.2% and exceeding the RBI’s conservative estimate of 7%.
- First-Half Momentum: The initial half of the fiscal year witnesses robust economic growth with a notable 7.7% in GDP.
- Gross Value Added (GVA) Outlook: Despite an anticipated dip from 7% in 2022-23 to 6.9%, the GVA outlook remains positive, hinting at sustained economic activity.
- Nominal GDP Growth: The NSO projects nominal GDP growth at 8.9%, a notable deviation from the Budget estimate of 10.5%, raising concerns about the fiscal deficit potentially breaching the 5.9% target.
- Sectoral Challenges: The farm sector and Trade, Hotels, Transport, Communication, and Services witness a significant slowdown, with GVA growth in agriculture dropping from 4% to 1.8%.
- Consumption Conundrum: Economists express worry over weak consumption growth at 4.4%, signaling the slowest pace in two decades, emphasizing the pivotal role of consumption in stimulating the economy.
GDP Overview:
- GDP, or Gross Domestic Product, quantifies the monetary value of all “final” goods and services produced within a country during a specific period.
- It encompasses Private Final Consumption Expenditure (PFCE), Government Final Consumption Expenditure (GFCE), Gross Fixed Capital Expenditure, and Net Exports.
Key Components of GDP:
- Private Final Consumption Expenditure (PFCE): Money spent by individuals on private consumption.
- Government Final Consumption Expenditure (GFCE): Government spending on current consumption, including salaries.
- Gross Fixed Capital Expenditure: Investments to enhance the economy’s productive capacity, ranging from business investments to infrastructure projects.
- Net Exports (NX): The net outcome of foreign spending on domestic goods and domestic spending on foreign goods.
GVA (Gross Value Added):
- GVA evaluates national income from the supply side, aggregating the value added across various sectors. It reflects the value of output minus intermediary inputs, shared among primary factors like labor and capital.
