GDP is expected to grow 7 percent: NSO

  • January 7, 2023
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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GDP is expected to grow 7 percent: NSO

Subject :Economy

  • Aided by good performance of the agriculture and services sectors, India’s Gross Domestic Product (GDP) is expected to grow 7 per cent in financial year 2022-23, according to the first advance estimates of national income released by the National Statistical Office (NSO).
  • This marks the first official government estimate for economic growth ahead of the upcoming Union Budget for 2023-24.

First Advance Estimates of GDP:

  • The FAE, first introduced in 2016-17, are typically published at the end of the first week of January.
  • They are the “first” official estimates of how GDP is expected to grow in that financial year.
  • Apart from it, they are also the “advance” estimates because they are published long before the financial year (April to March) is over.
  • The FAE is published soon after the end of the third quarter or Q3 (October, November, December).
  • However, they do not include the formal Q3 GDP data, which is published at the end of February as part of the Second Advance Estimates (SAE).
  • Significance:
    • The main significance of FAE lies in the fact that they are the GDP estimates that the Union Finance Ministry uses to decide the next financial year’s budget allocations.
    • From the Budget-making perspective, it is important to estimate the nominal GDP — both absolute level and its growth rate.
    • This will further help in calculating Real GDP and inflation.
    • The difference between the real and nominal GDP shows the levels of inflation in the year.Real GDP = Nominal GDP — Inflation Rate.
  • Calculation of FAE
    • According to the MoSPI, the approach for compiling the Advance Estimates is based on the Benchmark-Indicator method.
    • According to this, the estimates available for the previous year (2020-21 in this case) are extrapolated using relevant indicators reflecting the performance of sectors.
    • The MoSPI extrapolates sector-wise estimates using indicators such as previous data of Index of Industrial Production (IIP), sale of commercial vehicles data, etc.
economy GDP is expected to grow 7 percent: NSO