India1s GDP recently

India and the Indian Economy have been in news for the right and bright reasons. We have witnessed the pace of India1s economic growth recently and for the past few decades. The way GDP of India has expanded rapidly in the last 30 years; projections are it will grow by 6% each year from 2022-30. India took charge as the G20 President on the 1st of December 2022 and will convene the G20 Leaders1 Summit for the first time in the country in 2023. This article will show what GDP tells about our economy.

What does GDP stand for?

GDP (Gross Domestic Product) is the most widely used indicator of a country1s economy and is a benchmark used to compare one nation1s economy to the other.

GDP is a monetary measure of the economic output of a country. The market value of all final goods and services produced in a country during a year. Food and clothing are not included when calculating the GDP, while banking, tourism, and healthcare services are included.

Real and Nominal GDP:

Real GDP = the change in the production of goods and services over time.

 The nominal GDP reflects the numbers without adjusting inflation, real GDP factors in inflation, and currency rate fluctuations. Hence real gross domestic product reflects a clearer view of an economy. We use nominal GDP to compare a nation1s debt which isn’t inflation adjusted. Comparisons of a nation1s economies are often made based on nominal GDP and savings.

GDP by sectors and its Growth rate

There are many different sectors in India1s GDP. Agriculture, forestry, and fishing accounted for only 1 percent of the GDP in 2018. Construction, which is an important sector of the economy, contributed 2 percent. Industry and utilities were the next two sectors with 2 percent each. Accounting for over three-fourths of India1s GDP, services contributed 56 percent. The sectors that contribute to the fastest growth in India1s GDP are services and trade. India1s service sector is growing at a rapid pace and is projected to lead the way as the country1s growth rate increases.

GDP by Expenditure

The Expenditure-based CAGR is the change in the value of the goods and services produced over some time, divided by the change in the value of the goods and services produced over the same period. For example, if the value of goods and services produced goes up by 10 percent and their price also increases by 10 percent, then the Expenditure-based CAGR is 10 percent. The expenditure, which comprises government expenditure, imports, and net repayment of loans, accounted for almost three-fourths of India1s GDP in 2018. Principal items of expenditure include interest payments, repayments of debt, importation of goods and services, social security contributions, and net transfer payments.

India and other countries

India1s GDP has fluctuated all these years and has experienced dips during the dot com crisis and the global financial crisis in 2008. The country has become the fifth-largest economy by Nominal GDP and the third-largest economy by Purchasing Power Parity (PPP). It is remarkable how much India has changed since it was considered a poor country around the year 1960 (all-time low GDP of 37.03 Billion USD). The root causes of this tremendous growth can be – better management and entrepreneurial growth, an increased and skilled workforce, government focusing on private investments. Economists and the RBI estimated the GDP of this fiscal year to be 9.5%, disappointing the central bank1s GDP growth came out to be 8.7%. On the brighter side, India has overtaken the United Kingdom to become the fifth-largest economy in the world.

In the April-June quarter, the GDP growth rate was 13.5% whereas it grew just 6.3% in the July-September quarter. It may seem worrying for the Indian Economy, but in a year of unfortunate global events such as the Russia-Ukraine War (since February 2022), it had proven its strong macroeconomic fundamentals. According to the RBI, growth estimations for the fiscal year 2023-24 remain at 5.5%. India1s GDP is to grow at 6.9% in FY23 & will remain one of the fastest-growing major economies, says World Bank.

Key Takeaway

Despite having many fluctuations in its growth rate, India1s real GDP impressed its fellow economies. There was a robust pace of 9.6 percent between 2004 and 2008 and then we saw low growth of 4.4% in 2009 because of the global financial crisis. It reached 6.9% in 2010, 5.4% in 2011, 7.7% in 2014, 3.2% in 2015, 6.8% in 2017, 4.0% in 2019, -6.6% in 2020 because of the pandemic, and 8.7% in 2021-22, the current fiscal year. Largely affected by international events and crises, GDP described how well or poorly the country took up the situation. The challenges that we now face are population and ill-managed infrastructure which is creating poverty and unemployment. The leaders are focusing on facilitating private investments, equitable growth, and infrastructure. As they say- “When the going gets tough, the tough get going..” That1s what we can conclude about India1s GDP which has reflected strength and growth as its predominant characteristics.