GROSS DOMESTIC PRODUCT (GDP) GROWTH ESTIMATE BY NSO

06 Jan 2024 GROSS DOMESTIC PRODUCT (GDP) GROWTH ESTIMATE BY NSO

UPSC MAINS SYLLABUS GS3 PAPER: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment

WHY IN THE NEWS? 

1. As per the first advance estimate of the National Statistic Office (NSO), India’s real Gross Domestic Product (GDP) growth (adjusted for inflation from the base year 2011-12) for fiscal year 2023-24 is estimated at 7.3%.
2. Thus the economy is expected to surpass the 7% growth rate recently projected by the Reserve Bank of India (RBI).
3. However, the growth in Gross Value Addition (GVA) will come down from 7% in 2022 to 6.9% in 2023.
4. At the same time, Nominal GDP growth will fall short of the Budget 2023 estimate of 10.5%, to only 8.9%.
5. Less Nominal GDP growth translates into less tax collection for the Government thus leading to Fiscal deficit i.e.; the amount Government needs to borrow over and above Revenue expenditure. 
6. The GVA growth for the farm sector will more than halve from 4% in 2022 to just 1.8% in 2023 as in the case for  Trade, Hotels, Transport, Communication and Services.

WHAT IS GROSS DOMESTIC PRODUCT (GDP)?

1. The Gross Domestic Product (GDP) of the country includes all goods and services produced in the domestic boundary of India, produced by either a Citizen or a resident. 
2. GDP comprises of: 
   • Private Consumption
   • Investment from Public & Private sector
   • Expenditure incurred by the Government
   • While exports are included, imports are not.
3. As per the Budget 2023, Private consumption forms 58% of the GDP thus indicating that India is primarily a “consumer” economy. 
4. GDP is calculated by NSO through Expenditure method which includes: 
   • Final consumption expenditure on Goods & services by Households
   • Final consumption as well as Capital expenditure by Industries 
   • Taxes on products are included 
   • Imputed rent of self-occupied houses
5. Following items are not included in the GDP:
   • Transfer payments such as the Government expenditure on pension schemes, scholarships, unemployment allowances etc.
   • Expenditure on Intermediate goods 
   • Subsidies on products are not included 
   • It does not take into account the externalities caused during production of Goods & services such as pollution from refinery of crude oil
   • Secondary market items such as Bond and share transactions are not included 
6. As per Forbes India, India’s Current GDP (As of December 2023) is $3.73 trillion making it the 5th largest economy in the world. 

WHAT IS GROSS NATIONAL PRODUCT (GNP)? 

1. GNP = GDP + Income obtained by Indians through investment abroad. 
2. GNP includes the value of all goods & services produced by the “citizen” of the country either within the domestic boundary of the country or in foreign territories.
3. It does not include the products manufactured by foreign companies. For example, Adidas shoes, even if manufactured in India, are not included in India’s GNP.
4. As India is a majorly import dependent country with 56% GDP produced by consumer purchases, India’s GDP is greater than India’s GNP. 
5. The Net National Product (NNP) includes the Goods & services produced by citizens of India minus depreciation. Thus it more accurately reflects  India’s success in continuing “minimum production standard”.

WHAT IS GROSS VALUE ADDED (GVA)? 

1. GVA = GDP + Subsidies on Products – Taxes on products
2. GVA calculates National Income from Supply side.
3. NSO measures GVA @ Basic Price which includes the Factor Cost & Production Tax. It does not include Taxes on Product (such as GST) which if added, becomes the MRP. 
4. Thus GVA includes Net Taxation at Point of Production but does not include Net Taxation at Point of Sale. 
5. The Base year for GVA calculation has been revised to 2011-12. 
6. As per the Budget 2023, Service sector contributes 55% of Gross Value Addition (GVA) followed by Industry (26%) & then Agriculture (18%). 
7. Within Services, the Financial and Real Estate services contributes the largest share of 21% followed by Trade, Hotel, Transport, communication (18% ) & Public administration and Defence (14%). 

WHAT IS GREEN GDP?

1. Green GDP includes the estimates for “externalities” caused by production of goods & services within the domestic boundary of the country (GDP) such as:
   • Environmental degradation
   • Depletion of natural resources etc.
2. Thus, Green GDP = GDP minus Carbon emission cost + Opportunity cost of waste generated + adjusted savings of natural resource depletion.
3.  The Kuznets curve postulates that in the Initial development phase of a developing country, as the Per capita income increases, the pollution level increases as well. Thus, for development in Amrit Kaal (2023-2047), India faces concerning issue of growing pollution. 
4. Recently to achieve the target of Carbon neutrality by 2070 taken under Glasgow commitments at 26th COP of UNFCCC, the Ministry of Statistics and Programme Implementation has launched the Natural Capital Accounting and Valuation of Ecosystem Services (NCAVES) along with UN & European Union.
5. Also, recently Uttarakhand became the 1st state in India to measure Gross Environment Product (GEP) for quantifying ecological growth measurement. 
6. The GEP calculates value of the ecosystem in providing products and services, and it is one of the components of green GDP.

Download Yojna daily current affairs eng med 6th Jan 2024

UPSC PRELIMS 2024 PRACTISE QUESTION:

Q1: The national income of a country for a given period is equal to the: 

(a) total value of goods and services produced by the nationals

(b) sum of total consumption and investment expenditure

(c) sum of personal income of all individuals

(d) money value of final goods and services produced

ANSWER: (a) 

Suyash Rai

Qualified B.Tech in Civil ENGINEERING 
Currently working as Content developer at Argasia Education Pvt Ltd