Q2 Data
- December 1, 2022
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Q2 Data
Subject : Economy
Context:
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).
Details:
- The second quarter or Q2 refers to the months of July, August and September.
Indicators | Q2 on a year-on-year basis |
Gross Domestic Product | 6.3 per cent |
Gross Value Added (or GVA) | 5.6 per cent |
The GDP (at Rs 38,16,578 crore) is much higher than the GVA (which is at Rs 35,05,599 crore). |
- Decline in sectors crucial for job creation:
- Contraction in the manufacturing sector – 4.3% in th Q2.
- Growth in services is barely over 2 per cent.
- Mining and quarrying has contracted by almost 3%.
- GVA in agriculture (along with forestry and fishing) grew at 4.6%.
- On the GDP side
- The biggest engine of growth is private consumption expenditure– 55% of India’s total GDP.
- Expenditures towards investments are the second biggest contributor to the GDP-33 per cent. It has grown by 10.4% over FY21 and by almost 21% between FY20 and FY23.
- There has been a contraction in government final consumption expenditures- 10-11% of the GDP. It contracted by 4.4% per cent in Q2 and is 20% below the pre-Covid level.
- Net exports– since India imports far more than it exports, the NX value is negative. In Q2 it increased by 89 per cent.
Indicates?
The economy has picked up momentum since the pandemic, but the contraction in the manufacturing sector, higher interest rates and no sharp rise in consumption will pose challenges in the second half of the current financial year.
Concept:
What do GDP and GVA mean?
- 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. That is why GDP captures the total “demand” in the economy.
- Components:
- All the money Indians spent for their private consumption –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.
- The GDP data is more useful when looking at annual economic growth and when one wants to compare the economic growth of a country either with its growth in the past or with another country.
- The GVA calculates the same national income from the supply side.
- It does so by adding up all the value added across different sectors.
- 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.
- By looking at the GVA growth one can understand which sector of the economy is robust and which is struggling. When one is looking at quarterly data, it is best to look at GVA data.
How are the two related?
- The GDP is derived by looking at the GVA data.
- GDP = (GVA) + (Taxes earned by the government) — (Subsidies provided by the government)