The GDP data for the first quarter of the current financial year (2021-22) was released by the Ministry of Statistics and Programme Implementation (MoSPI).
The GDP data makes up a major source of information to gauge the health of the economy, especially during the current pandemic.
The data focuses on two set of aspects. The first aspect focuses on the total demand in the economy and the other on total supply.
The first aspect, the GDP, is the total monetary value of final goods and services produced in a country in a given period of time. In other words, it looks for total demand created in the country.
The second aspect, the Gross Value Added or GVA, looks at monetary value added in different productive sectors of the economy. In other words, it looks at total supply.
The GDP is calculated by taking GVA and adding all taxes imposed by the government and subtracting subsidies given by the government.
GDP = (GVA) + (Taxes earned by the government) — (Subsidies provided by the government)
The difference between the value of GVA and GDP will provide a sense of the role the government played.
If government earned more taxes than the total amount given as subsidies, GDP will be higher than GVA.
If the government spent more on subsidies than the revenues earned from taxes, absolute level of GVA would be higher than the absolute level of GDP.
The latest data
GDP of India grew by 20.1% in the current quarter Q1. GVA during the same period grew by 18.1% Year on Year.
This means that total output created by the economy during the period was 20.1% more than the output of the economy in the same time last year.
The V-shaped recovery
The growth seen in India is a reflection of low base effect and not absolutely v-shaped recovery. In the v-shaped recovery, the absolute GDP of an economy gets back to the level before the crisis.
Components of GDP
GDP = C + I + G + NX
Consumption (C) demand from private individuals (56% of GDP)
Investment (I) demand generated by private sector businesses (32% of GDP)
Demand for goods and services generated by the government (G) (11% of GDP).
Demand created by “Net Exports” (NX)