India’s Economic Growth in Q2

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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).

 

 


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