TRENDS IN COMPOSITION OF G D P IN INDIA

 As per the GDP (sum total of value of all goods and services produced domestically within the country)estimated by National Statistical Office the third quarter GDP (October-December 2022)of India recorded slow growth of 4.4 percent.NSO also estimated that 2022-23 GDP growth will be 7% well on the track.NSO has revised the preceeding year's (2021-22)growth at a higher level of 9.1%.As per NSO second revised estimate for the covid hit year 2020-21 the contraction estimated to be -5.7% as against-7.3% shown in the first provisional estimate. According to Chief Economic Advisor Anantha Nageswaran India is on the right track to achieve 7% growth for the full fiscal  year 2022-23 for which we just need a growth rate of 4% in Q4 to achieve a 7% growth. Though the CEA was confident about 7% growth, he also listed down side risks like-global growth outlook slowing down from 3.4% in 2022 to 2.9% in 2023 as per IMF's revised World Economic Outlook on account of synchronized monetary tightening, adverse spillovers from prolonged disruptions in supply chains and heightened uncertainty due to geo political conflicts..

Analysis of GDP growth trend provided by NSO showed that while in Q1 growth was 13.2% it declined to 6.3% in Q2 and the figure further declined to 5.2% in Q3 for the FY 2022-23.Data indicated that manufacturing growth of 3.6% achieved in Q2 declined to 1.21 % in Q3.Growth of services sector  slowed down from 16.3% in Q1 to 9.4% in Q2 and 6.2% in Q3 of the current fiscal year.Incidentally demand slow down is reflected in the growth of final consumption expenditure as its share in GDP has witnessed marginal decline from  61.6% in 2020-21 to 61.1% in 2021-22.Real GDP or GDP at constant ( 2011-12) prices  in the year 2022-23 is estimated at ₹159.71 lakh crores as against first revised estimate of GDP for the year 2021-22 of ₹ 149.26 lakh crore. The growth in real GDP during 2022-23 is estimated 7% compared to 9.1% in 2021-22  .GDP at constant prices in Q3 2022-23  is  estimated at ₹40.19  lakh crores as against ₹38.51 lakh crores in Q3 2021-22 showing a growth of 4.4% whereas at current prices in Q3 2022-23 the GDP estimated was ₹69.38 lakh crores compared to ₹62.39 lakh crores in Q3 of 2021-22 indicating 11.2 % growth. 

As per the second advance estimate of Gross Value Added at base prices by NSO showed that in 2021-22 agriculture, forestry and fisheries recorded 3.5% which is projected to decline to 3.3 % in 2022-23, mining and quarrying showed significant fall from 7.1 to 3.4 during the same period. Manufacturing which stood at  a peak level of 11.1% in 2021-22 practically shrunk to 0.6 in 2022-23.  Growth o electricity, gas, water supply and other utilities remained more or less  stable at 9.9 and 9.2 respectively for the years 2021-22 and 2022-23. Though Construction recorded 14.8% growth in 2021 -22 it is projected to decline to 9.1 in 2022-23. The sectors projected to show growth in 2022-23 are trade hotels transport and communication from 13.8  in 2021-22 to 14.2 and Financial Real Estate and professional services from 4.7 in 2021-22 to 6.9 in 2022-23.

Gross Capital Formation (GCF) at current prices is  estimated to be ₹73.62 lakh crores for the year 2021-22 as compared to ₹55.27  lakh crores during pandemic period 2020-21 The rate  of GCF to GDP is 31.4% during 2021-22 as against 27.9% in 2020-21. It has been observed that the rates of capital formation in the period 2011-12 to 2021-22 have been invariably very high except for 2020-21.The rate of GCF to GDP at constant prices was 31.7% in 2020-21 and 35.5% in 2021-22. Similarly private consumption expenditure (PFCE) at current prices is estimated to be ₹143.44 lakh crores for the year 2021-22 compared to the PFCE to GDP ratio at current prices at 61.3% and 61.1 %.PFCE at constant prices is estimated at ₹78.24 lakh crores and ₹87.04 lakh crores for the years 2020-21 and 2021-22 respectively. Corresponding PFCE  GDP ratio for 2020-21 and 2021-22 are 57.2% and 58.3% respectively. Another interesting aspect is  growth of Government Final Consumption Expenditure (GFCE) at current prices increased from ₹23.03 lakh crores in 2020-21 to ₹26.25 lakh crores in 2021-22 .At constant prices it stood at ₹14.78 lakh crores and ₹15.75 lakh crores  for 2020-21 and 2021-22 respectively. The contribution of net exports  to real growth was(-)2.8 percentage points. This has improved by nearly 1 percentage point to(-)1.9 % points. Exports of goods and services accounted for $ 65.15 billion in January 2023 compared to imports worth $ 66.42 billion recording  trade deficit of $ 1.27 in January 2023 as against $56.86 billion exports and $ 65.80 billion imports showing a trade deficit of 8.95 billion in January 2022.However Commerce Minister expects exports of goods and services to cross $ 750 billion in 2022-23. 

Our recovery process indicates that urban recovery is accelerating at a faster pace than rural recovery. Essentially effective measures should be adopted to boost rural demand including rural investment and employment schemes with the involvement of local self governments. The purchasing Managers' Index (PMI) for India's dominant Services sector survey conducted by the credit rating agency Standard and Poor Global showed that PMI for service sector reached a 12 year high of 59.4 in February from 57.2 in January 2023 with marginal increase in job creation. On the other hand manufacturing sector PMI declined to a four month low 55.3 in February from 55.4 in January due to input costs in the manufacturing industry with higher prices for electronic components, energy, food stuffs  metals and textiles etc.According to Ministry of Statistics and Programme Implementation industrial production in India increased 4.3% in December 2022 from an upward rise of 7.3% in November. Electricity production recorded maximum growth 10.4% followed by mining 9.8% and manufacturing 2.6%.On the use- based side largest increase was observed in primary goods 8.3% and construction 8.2% capital 7.6% followed by non durables.Many economists endorse real GDP growth of 7%  for the year 2022-23,and estimate real GDP to grow  around 6% in 2023-24 , amidst easing of pent-up demand, tighter monetary  and weak global conditions. Even though private consumption expenditure was the largest contributor to sustained GDP growth , consumer spending  can be negatively impacted due to factors like hesitancy in private investment, high interest rates, inflationary pressures and other global headwinds.


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