Q3
DATA FOR FY23 - ECONOMY
What's
in the news?
●
The Ministry
of Statistics and Programme Implementation (MoSPI) released economic growth
data – Gross Domestic Product (GDP) and Gross Value Added (GVA) — for the third
quarter (Q3 or October to December) of the current financial year (2022-23 or
FY23).
Data
released by MoSPI for Q3 of FY23:
●
The Ministry of Statistics and Programme
Implementation (MoSPI) released economic growth data for the third quarter
(October to December) of the current financial year (2022-23 or FY23).
●
In terms of GDP, the growth rate has decelerated to 4.4% in Q3
●
The main growth impulse has come from the spending towards investments in the
economy.
○
This is a good sign as increase in investments typically augurs well for
sustaining an economy’s growth momentum.
●
However, the biggest worry has been on the
personal consumption front. A slowdown
in private consumption, the biggest engine of GDP growth, can eventually
disincentive investments.
●
Government’s
expenditures have also seen a decline. This is likely the
result of the government trying to meet fiscal deficit parameters.
●
This is the second consecutive quarter
when manufacturing, which is often
viewed as a source of creating jobs, has contracted.
● However, robust growth in the construction sector as well as services (both financial and non-financial) are a relief.
Outlook
on Indian Economy:
●
India’s economy was fast losing momentum
before Covid-19 Pandemic led to a contraction.
●
Coming out of the pandemic, India’s
economy has reclaimed the mantle of the
fastest-growing major economy in the world.
●
However, data suggests that India is
losing this momentum. It is likely to slow down from 9.1% in FY22 to under 7%
in FY23.
●
Factors
Behind this Contraction:
○
Fading away from the pent-up demand from
the lockdown period.
○
Tighter Fiscal & Monetary Policy
rates.
Go
back to Basics:
What
is GDP?
●
The total monetary or market value of all finished goods and services
produced within a country’s borders within a specific period of time is called
its gross domestic product (GDP).
●
It is a comprehensive measure of the
country’s economic health, expressed in terms of the overall domestic production
and functions.
●
The GDP of a country includes all private
and public consumption, government outlays, investments, additions to private
inventories, paid-in construction costs, and foreign balance of trade.
What
is GVA?
●
In situations where the GDP fails to
measure the real economic scenario, the Gross Value Added (GVA) is a better
gauge.
●
The GVA measures the total value of goods
and services produced in an economy, and the amount of value added to a
product.
●
It is defined as the output produced after
the deduction of the intermediate value of consumption. The GVA, in India, is
measured at ‘basic prices’
Components
of GDP:
Under GDP, there are four
main heads
GDP= C+G+I+X-M
Relationship
between GDP and GVA:
GDP and GVA are related
as follows.
GDP
= GVA + Taxes levied by governments on products – Subsidies provided by
government on products
Typically, the absolute
level of GDP is more than the absolute level of GVA because taxes received are
more than subsidies spent by the government.