India’s Economic Growth in Q2
26-08-2023
10:48 AM
1 min read
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Overview:
Recently, the Ministry of Statistics and Programme Implementation (MoSPI) released India’s economic growth data for the second quarter of the current financial year (2022-23 or FY23).
India’s Economic Growth in Q2:
The second quarter or Q2 refers to the months of July, August and September.
- India’s Gross Domestic Product (GDP) grew by 6.3 per cent in Q2 on a year-on-year basis.
- In other words, it was 6.3% more than the GDP in the same months in 2021.
- MoSPI also reported that India’s Gross Value Added (or GVA) in Q2 grew by. 5.6 per cent on a year-on-year basis.
- GDP and GVA:
- GDP and GVA are the two main ways to ascertain the country’s economic performance.
- Both are measures of national income.
- The GDP measures the monetary measure of all “final” goods and services— those that are bought by the final user— produced in a country in a given period.
- The GDP does this by adding up the total expenditures in the economy; in other words, it looks at who spent how much.
- That is why GDP captures the total “demand” in the economy.
- There are four key “engines of GDP growth”. These are:
- All the money Indians spent for their private consumption (that is, Private Final Consumption Expenditure or PFCE)
- All the money the government spent on its current consumption, such as salaries [Government Final Consumption Expenditure or GFCE]
- All the money spent towards investments to boost the productive capacity of the economy. This includes business firms investing in factories or the governments building roads and bridges [Gross Fixed Capital Expenditure]
- The net effect of exports (what foreigners spent on our goods) and imports (what Indians spent on foreign goods) [Net Exports or NX].
- GVA:
- The GVA calculates the same national income from the supply side.
- It does so by adding up all the value added across different sectors.
- According to the RBI, the GVA of a sector is defined as the value of output minus the value of its intermediary inputs.
- This “value added” is shared among the primary factors of production, labour and capital.
- The GDP and GVA are related by the following equation:
- GDP = (GVA) + (Taxes earned by the government) — (Subsidies provided by the government).
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Q1) What are the four components of GDP?
The four components of gross domestic product are personal consumption, business investment, government spending, and net exports.
Source: Indian Express