- India’s GDP Growth Rate 13.5% : Will Leave a Mark on the World for Years?
- What is GDP according to the dictionary?
- How is GDP calculated?
- What is happening in these three sectors in India due to which the growth for the last 2 years has increased at such a rate?
- The first segment – trade hotel transport communication and services related to broadcasting
- Growth was 16.8% in construction sector in the year 2022-23
- In financial year 22-23 budget the government allotted 10 lakh crore for infrastructure
- India is trying to increase the rate of manufacturing in India
- India is benefiting from China’s drought and USA’s inflation
India’s GDP Growth Rate 13.5% : Will Leave a Mark on the World for Years?
On 31st August 2022 National Statistical office published india’s GDP figure for the first quarter of year 2022-23 that is from April to June and the growth rate had increased by 13.5 percent
If compared with China or USA we get a clear picture that in the same quarter the GDP growth for China has increased by 0.6 percent and for USA the growth is decreased by 1.6 percent and hence it is clear that the india’s GDP is doing really well relatively to the developed countries
So the next question arises: what did India do so different from these developing countries that such a huge difference is seen?
Are there any initiatives by the Government which did the trick? Or was it our economy that was ready to grow so well? And has flourished when a chance was seen or are the figures false and completely different from the reality of India
What is the reason behind such an outstanding performance by India in the world economy?
What is GDP according to the dictionary?
GDP is the total value of goods produced and services provided in a country during 1 year.
How is GDP calculated?
Total production in a year plus taxes minus subsidies. If sometimes taxes are increased or subsidies are increased it affects the GDP of a country. So if we look at a countries economy then we need to differently look out for taxes and subsidies and with this if we want to really know that how much a country has produced or provided its services in that quarter of the year then you need to calculate the GVA which is gross value added, which is a component of GDP which is the total of goods and services offered by a country. Even though GVA has some limitations and clauses it still gives us a clear picture.
As we can see that in the year 2022-23 the construction sector is the sector with the highest growth.
The manufacturing sector experienced a growth of 49% in the year 2021 but decreased 4.8% in the year 2022.
In the sector of trade hotel transport communication and services related to broadcasting in the year 2021 the growth was 34.3% and in the year 2022 it was 25.7%. Which is a balanced growth in both the years.
What is happening in these three sectors in India due to which the growth for the last 2 years has increased at such a rate?
If we talk about the economy of India, consumption plays a major role in it and this consumption is increasing rapidly due to internet connection which is easily available nowadays. For example if we talk about E-Commerce data then the segment of e-commerce in India has an expected growth of 25.5% in the upcoming quarterly calendar. So if you want to take advantage of these opportunities then you should start your own business. The best solution for this is Amazon which is the most used shopping destination of India where crores of people prefer shopping. Amazon delivers almost across all cities of India. More than 10 lacs of sellers trust in Amazon and work with this brand. Amazon at the same time provides various services to these sellers like the seven days payment option. For this all you have to do is go to amazon.in and open your free shop with the help of your pan card etc you will be able to understand that once you try going to Amazon site What Amazon does this it connects you with GST support from third party network with just around Rs350 free listing support for 10 products.
The first segment – trade hotel transport communication and services related to broadcasting
Major sectors under this segment are contact related which is why when covid-19 impacted the whole world these sectors were rather in profit but as the Kuwait started getting in control these sectors started profiting more because the problems for this sector reduced but if we look at the figures only from last 2 years it won’t give us a clear picture so we need to go back to pre Covid level.
So what we need to do is to go back to the financial year 2019 20 first quarter that is from April 2019 to June 2020. We need to focus on the figures of growth of the sectors. The GBA of the sectors are the factors which will help us in calculating whether there is a growth or is it stable or they are yet to recover the economy of the segment.
In the first quarter of financial year 2019-20 the GDP of this segment was 630 860 crores and in the first quarter of your 2022 to 23 the GDP is 559723 crores. This has reduced by 11%. India’s GDP growth during covid was almost equal to zero and now we can say that the recovery this year is somewhere trying to compensate for the last 2 years in this particular sector but does it work the same for other sectors too?
Growth was 16.8% in construction sector in the year 2022-23
While in the year 2021-22 the growth was 71.3%. Now the construction sector has five sub sectors which are residential, commercial, industrial infrastructure and energy and utilities construction.f
The 50% of share in this sector goes to the residential sector in this quarter. 16.8% growth was given to construction by government expense which means infrastructure. If we talk about commercial construction many companies are either following the trend of work from home or are hybrid. There is recovery here in this sector but the demand is not yet that high in the commercial sector and hence the particular sub sector has quite muted flow.
If we look at residential construction the interest rates in the past year were really very low. They were about 7.9 to 7.8% for home loans and many people took advantage of this opportunity and took lots of home loans due to which the growth in the last quarter was high in this sector. it was driven by residential construction but that is not the case now, as we have same that the interest rates are constantly growing because the inflation in India is increasing and hence it is necessary to take control of the rising prices of basic goods and services and there is only one solution for all this which is to increase the interest rates.
In financial year 22-23 budget the government allotted 10 lakh crore for infrastructure
From which 2 lakh crores for transport and highways, 1.5 lakh crore for railways and 20000 crore for metro and others. And these are the factors responsible for the growth of the construction sector. in this financial year we need to see whether the sector is still muted or is there really any growth for this we need to compare it to quarter one of financial year 19 and 20 in the first quarter of financial year 1920 that is pre covid level the GVA of this sector 262828 crores which has increased to 262918 crores which is almost the same pre and post covid level even though figures are quiet huge but yet the difference is not that significant when compared.
India is trying to increase the rate of manufacturing in India
Now let’s see the final sector which is the manufacturing sector. Out of all the people working in India 26% of people work in the manufacturing sector. The growth of the manufacturing sector was quite notable which reduced a bit this year. These figures may not be that great for the Government of India but India is trying to increase the rate of manufacturing in India and increase the incentives with its help as there are issues going on in China related to manufacturing level. That is, in the financial year 2019-20 first quarter was 578000 crores while India’s GDP for post covid level that is financial year 2022-23 it is 605000 crores which increased by 4.5%. Which means that the manufacturing sector has completely recovered and is at a better position than that of other sectors and it is expected that the sector will be growing with a great speed.
The quarterly of India’s GDP growth is 13.7% and matches the data which was given by the IMF. According to IMF annual data India will have 7% growth for the year but if we show 8 to 9% of growth every year then before our hundred independent day of India we will be a developed country which is why this growth rate is very crucial for India enhance if we want to push this with a better speed then manufacturing is one of the most important tool for India. In order to make China a developed country manufacturing has played a very important role and we have similar opportunities standing with arms open for India and we must grab it by hook or crook.
Let’s look into a few more figures in detail now that we have seen the growth of major sectors we need to broaden our perspective.
We know that the overall India’s growth rate is 13.5% and we are way better than that of pre covid level and the level of growth into the further years will be the real growth that India will be proving to the world.
If we compare the same thing to US or China we can see that the growth rate of China was 0.6% and that of USA was -1.6%
India is benefiting from China’s drought and USA’s inflation
One more benefit that India is having is that China has brought many policies like China’s zero covid policy and also that there is a drought going on in China which is caused due to rise in manufacturing. But they did not take care of Mother Nature because of which they have to face problems now due to which they are facing an economic crisis right now and the reason behind the degrowth of the USA is inflation Russia Ukraine war.
So at least right now there is no negative policy in India according to the RBI or government of India and further we will understand with the help of quarterly GDP calculation what the circumstances of the Indian economy are.