The government has projected India’s nominal gross domestic product growth rate at 14.4 percent for the financial year 2022. Finance Minister Nirmala Sitharaman on Monday announced what has been dubbed as the most crucial Budget of the country in recent years.
The GDP growth projection for FY22 remains among the most crucial figures in the Union Budget 2021 as this reflects the exact pace at which the government expects the economy to show a firm recovery.
Nominal GDP refers to measuring the value of all final goods and services produced within a country for a given period at current market prices. Real GDP takes nominal GDP for a given period and adjusts it for changes in prices.
The government on Friday released the revised economic growth rate data for 2019-20, showing the key number as 4 percent from the earlier estimated 4.2 percent, citing contraction in secondary sectors like manufacturing and construction.
“Real GDP or GDP at constant (2011-12) prices for the years 2019-20 and 2018-19 stands at Rs 145.69 trillion and Rs 140.03 trillion, respectively, showing a growth of 4.0 percent during 2019-20 and 6.5 percent during 2018-19,” National Statistical Office said in revised national account data.
The Reserve Bank of India (RBI) had in December made a revision in the GDP contraction for the year ending March 21 to 7.5 percent from 9.5 percent.
The government has, on a number of occasions in the last one year, reiterated that economic growth remains among its highest priorities after the COVID-19 pandemic hit hard an already struggling economy.
Chief Economic Advisor K Subramanian too in the latest Economic Survey suggested that the government keep economic growth as the highest priority, and not worry about the fiscal deficit. In the absence of growth, the country will find it difficult to service its debt obligation, he stated.
A fiscal deficit is a shortfall in a government’s income compared with its expenditure.
Theoretically, an increase in the fiscal deficit gets an economy out of a slowdown as spending rises, giving more money in the hands of people to buy and invest. However, long-term deficits can be harmful for a country’s growth and stability.
India’s economic growth contracted by a massive 23.9 percent year-on-year (YoY) in the June 2020 quarter, the first GDP contraction in over 40 years. For the Sept quarter, the growth contracted 7.5 percent.