WHY IN NEWS ?
- Recently Real gross domestic product (GDP) growth for April to June has come in at 7.8%. This is the highest in four quarters.
CURRENT FIGURES OF REAL AND NOMINAL GDP:
- Real and nominal GDP growth stood at 7.8% and 8%, respectively.
- Real GDP tends to be lower because we subtract inflation from nominal growth.
- Retail inflation for Q1 was 4.6%, while wholesale prices fell 2.9%.
- The rate of inflation used in growth calculation is called the deflator, which tends to be somewhere between retail and wholesale inflation.
- Given that wholesale prices fell, it’s hardly surprising that the GDP deflator is very close to 0%.
- Hence, there isn’t much of a difference between nominal and real growth.
CAUSES OF GDP GROWTH IN Q1 2023:
- Using this, GDP in Q1 was ₹40.4 trillion or 7.8% higher than a year ago.
- Economic growth during April to June has been good since 2021—primarily because of the base effect.
- In Q1 2019-20—before the pandemic—GDP had stood at ₹35.6 trillion.
- This contracted by a little over 23% in April-June 2020 to ₹27.2 trillion, due to the pandemic-induced lockdown.
- Since then, economic growth during this quarter has looked good due to this low number.
SECTORS PERFORMING WELL:
- Another way of calculating GDP is to look at the value added by agriculture, industry and services at the broad level.
- Agriculture grew 3.5%, and industry 5.5%. Within industry, manufacturing grew 4.7%, the best since Q1 last year.
- Construction grew 7.9% thanks to housing. But on the whole, it was services—which formed 56% of the gross value added—with 10.3% growth that drove GDP in these three months.
- Within services, financial services, real estate and professional services grew by 12.2%.
INVESTMENT TRENDS IN ECONOMY:
- Investment grew 8% on-year.
- Investment growth over the four years has averaged 4.1% per year, slightly better than GDP growth.
- In an environment where consumer expenditure is picking up at a slow pace, investment has become an important part of creating new jobs and driving up individual income and aggregate economic growth.
SYLLABUS: PRELIMS, CURRENT AFFAIRS , INDIAN ECONOMY