Nominal GDP Growth at 16.1%? National Statistical Office releases India’s Economic accomplishment

The National Statistical Office (NSO), an arm of the Ministry of Statistics and Programme Implementation (MoSPI), has recently shared its provisional estimates (PE) for India’s national income and Gross Domestic Product (GDP) for the financial year 2022-23. These estimates, pivotal for understanding India’s economic position, include a comprehensive breakdown of the expenditure components of GDP, evaluated at both constant and current prices.

One of the key highlights of the NSO‘s report is the projection of India’s real GDP. The real GDP, which takes into account the inflation rate to present an accurate depiction of economic growth, is expected to reach a level of ₹160.06 lakh crore in 2022-23, a substantial increase from the first revised GDP estimate for 2021-22, which stood at ₹149.26 lakh crore. This reflects a significant stride in the nation’s economic growth, albeit at a slower pace, with a growth rate of 7.2 percent projected for 2022-23, compared to the more robust 9.1 percent witnessed in the previous year, 2021-22.

In contrast, the nominal GDP, which does not adjust for inflation and represents the current market value, for 2022-23 is estimated to hit a level of ₹272.41 lakh crore. This indicates an impressive growth rate of 16.1 percent from ₹234.71 lakh crore in 2021-22. The acceleration in the nominal GDP growth is suggestive of the potential increase in the production of goods and services or an increase in their prices, or both.

Further dissecting the India’s GDP into quarterly figures, the estimates for the last quarter of 2022-23, referred to as Q4 2022-23, provide insightful observations. The GDP at constant prices (with 2011-12 as the base year) for this quarter is estimated to be ₹43.62 lakh crore, marking a 6.1 percent growth from the ₹41.12 lakh crore in Q4 2021-22. This positive quarterly growth rate suggests a steady economic performance throughout the year.

The India’s GDP at current prices for Q4 2022-23 paints a similar picture, with an estimate of ₹71.82 lakh crore, showing a 10.4 percent growth from the same quarter in the previous year, which recorded a GDP of ₹65.05 lakh crore. The steady rise in GDP, both at constant and current prices, underlines a robust economic performance despite the challenging global economic environment.

To understand the methodology behind these estimates, it’s important to note that these figures were compiled using the benchmark-indicator method. In this approach, the estimates from the previous year (2021-22 in this case) are used as the benchmark. These benchmark figures are then extrapolated using various indicators reflecting the performance of sectors. The initial advance estimates have been revised, taking into account the latest information available for these indicators, providing a more accurate estimate for the fiscal year 2022-23.

Several key indicators have been used to compile the sector-wise estimates, reflecting the multi-dimensional nature of India’s economy. The Index of Industrial Production (IIP) offers insight into the performance of the industrial sector, while the financial performance of listed private companies helps gauge the performance of the corporate sector. Agricultural contribution to the India’s GDP is reflected through the third advance estimates of crop production for 2022-23. Livestock product figures and fish production data offer insight into the livestock and fisheries sectors, respectively.

The production and consumption figures of cement and steel give a sense of the performance of the construction and manufacturing sectors. The railways’ net tonne kilometers and passenger kilometers data, along with the passenger and cargo traffic handled by civil aviation and major sea ports, provide a picture of the transport sector’s contribution. The sales of commercial vehicles data can indicate the level of commercial activity in the economy. Lastly, bank deposits & credits data, as well as the accounts of Central & State Governments, play crucial roles in understanding the financial sector’s performance.

Tax revenue, a key component of GDP, includes both non-GST and GST revenues. This comprehensive approach helps paint a more accurate picture of the country’s revenue inflow. The methodology for compiling taxes on products at constant prices involves volume extrapolation, done using the volume growth of taxed goods and services.

An important facet of the national expenditure, product subsidies, have been compiled using the latest information on major subsidies like food, urea, petroleum, and nutrient-based subsidies. Data from the Controller General of Accounts (CGA) and the Comptroller and Auditor General of India (CAG), up to March 2023, and the state-wise BE provision for 2022-23, have all been used to estimate the Government Final Consumption Expenditure (GFCE). The GFCE, a key component of India’s GDP, includes all government current expenditures for purchases of goods and services, including compensation of employees and most expenditures on national defense and security.

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However, these estimates, though comprehensive, are not absolute. The NSO has explicitly noted that the improved data coverage and any revisions in the input data by source agencies could impact subsequent revisions of these estimates. Thus, users should exercise caution and consider these potential changes while interpreting the figures.

Looking ahead, the NSO plans to release the next batch of quarterly GDP estimates for Q1 2023-24 on August 31, 2023. This will further shed light on the trajectory of India’s economy.

To conclude, the provisional estimates released by the NSO underscore a promising economic performance for India in the fiscal year 2022-23. Despite a marginal deceleration compared to the previous year, the continued growth signifies the resilience of the Indian economy amidst global challenges.

Now let’s take a look at the current situation of the top 5 economies of the world, and how things are not looking well for them.

These recent  findings hold implications for policymakers, researchers, and economic analysts alike as they continue to navigate and shape the trajectory of the Indian economy.

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