Last updated: January 31, 2023, 2:23 PM IST
India’s economy is expected to slow to 6.5 percent in the fiscal year starting in April but will remain the fastest growing major economy in the world as it outperformed in dealing with the extraordinary array of challenges facing the world , the Economic Survey 2022-23 said Tuesday. LIVE updates
Compared to the projected growth of 7% in the current fiscal year (April 2022 to March 2023) and the growth of 8.7% in the previous year, India’s GDP is expected to increase by 6.5% in 2023–2024 to grow.
Like the rest of the world, India also faced an extraordinary set of challenges as financial conditions tightened and supply chain disruptions brought about by a protracted war in Europe, but “resisted better than most economies,” it said. annual document describing the state of the economy.
The study submitted to parliament by Finance Minister Nirmala Sitharaman states that India is the world’s third largest economy in terms of PPP (purchasing power parity) and fifth largest in terms of exchange rate.
What is GDP?
The total monetary or market value of all finished goods and services produced within a country’s borders over a period of time is known as gross domestic product (GDP).
It serves as a thorough assessment of the state of the economy in a particular country as it is a broad indicator of total domestic production.
While GDP is often estimated on an annual basis, it can also be calculated quarterly. For example, the United States government estimates annualized GDP for both the calendar year and each fiscal quarter. All data in this report is presented in real terms, which means that it is adjusted for price changes and therefore excludes inflation.
- According to a report by Investopediais the total monetary value of all finished goods and services produced in a country during a given period of time.
- An estimate of a country’s GDP can be used to determine the size and growth rate of an economy.
- Expenditure, output, and income can all be used to calculate GDP, which can then be adjusted for population and inflation to give more detailed results.
- While nominal GDP ignores the effects of inflation, real GDP does not.
- Although it has its limits, GDP is an important tool to help companies, investors and policymakers make strategic decisions, the report said.
Types of GDP
The types of GDP are as follows:
- Nominal GDP: Also referred to as nominal gross domestic product. Nominal GDP measures GDP using current market prices to determine the value of all final goods and services. When calculating GDP, nominal GDP takes into account variables such as inflation, price fluctuations, fluctuating interest rates, and money supply.
- Real GDP: The value of all products and services determined in an economy, taking inflation into account, is called real GDP.
In other words, sometimes referred to as inflation-adjusted gross domestic product, it measures the value of goods and services generated in an economy during a year, adjusted for inflation.
In addition to inflation, real GDP also takes deflation into account. As a result, real GDP is a more accurate indicator of the state of the economy than other indicators such as nominal GDP (which measures total output based on prices).
Meaning of GDP
Economists worldwide use a variety of metrics to measure the growth of an economy, with GDP considered the most important. It takes into account the country’s annual total production.
It acts as a major determinant of how the economy develops and a crucial benchmark for measuring an economy’s performance.
What the economic survey said:
– It pegged FY24 GDP growth at 6-6.8%
– Linked FY24 baseline real GDP growth of 6.5%
– Pegged FY24 baseline nominal GDP growth of 11%
– FY23 GDP growth of 7%
The pandemic factor
- Due to several advantages that India has over other countries amid the economic disruption caused by the COVID-19 pandemic, the government believes India’s GDP growth to be between 6 and 6.8%, which is still less than the predicted 7% for the current financial year. , would be doable.
- China’s current surge in Covid has had little impact on the rest of the world’s health and economy, leaving supply chains intact in many countries, including India, according to the Economic Survey, which produced the forecast.
- The Economic Survey predicted that while Western countries are experiencing “recession trends” and inflation in India remains below 6%, more money is likely to flow into the country. According to the official poll that evaluates how the economy has performed over the past year, this will result in “improving the minds of animals” and boosting private sector investment.
Read all the latest Explainers here