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GDP Growth & Economic Trends



  Sep 07, 2023

Understanding GDP Growth and Economic Trends


Q1: How is GDP calculated, and what drove GDP growth in April-June?

GDP is calculated by adding up private consumption expenditure, investment, government expenditure, and net exports. In Q1, GDP was ₹40.4 trillion, 7.8% higher than the previous year. Economic growth in this quarter has been influenced by the base effect, where the low GDP numbers from Q1 2020 due to the pandemic-induced lockdown contribute to the apparent growth.
 

Q2: How has real GDP growth looked over the past four years?

Real GDP, adjusted for inflation, has grown at an average rate of 3.2% per year from 2019-20 to 2023-24. This indicates that the economy is still recovering from the impact of the COVID-19 pandemic. Private consumption expenditure, a significant part of GDP, has grown at an average rate of 3.6% per year during this period.
 

Q3: What is the difference between real GDP and nominal GDP?

Real GDP accounts for inflation by subtracting it from nominal growth. In Q1, real GDP growth was 7.8%, while nominal GDP growth was 8%. The difference is due to the fact that the GDP deflator, which measures inflation's impact on GDP, was very close to 0% due to falling wholesale prices even as retail prices did grow.
 

Q4: Which sectors have performed well in contributing to GDP growth?

Agriculture grew by 3.5%, and industry grew by 5.5%, with manufacturing seeing 4.7% growth. Services, accounting for 56% of gross value added, drove GDP with 10.3% growth. Financial services, real estate, and professional services within the services sector grew by 12.2%.
 

Q5: How has investment growth fared?

Investment grew by 8% year-on-year. Over the four-year period, investment growth averaged 4.1% per year, slightly better than GDP growth. Investment is crucial for job creation and driving economic growth, especially when consumer expenditure is recovering slowly.
 

Q6: Where can I find more information on these economic trends?

For more information and in-depth analysis on economic trends, you can visit the official website of SRIRAM'S IAS at www.sriramsias.com. We provide valuable insights and resources related to various aspects of the economy and other important topics.


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