GDP TRENDS

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

CIVIL SERVICES EXAM