The National Statistical Office (NSO), Ministry of Statistics and Program Implementation (MoSPI), has released its First Advance Estimates (FAE) of National Income for the financial year 2022–2023 (FY23) at both constant (2011–12) and current prices.
- According to the NSO’s first FAE, the Indian economy will grow at a rate of 7% in FY23, up from 8.7% in FY22.
- However, these are preliminary estimates for 2022-2033.
The forecast is slightly higher than the 6.8% projection of the Reserve Bank of India (RBI).
Background
The FAE of Gross Domestic Product (GDP), launched in 2016-17 to serve as essential inputs to the budget exercise, is based on limited data and prepared using the Benchmark-Indicator Method.
- It implies that the estimates available for the previous year (2021-22 in this case) are extrapolated using relevant indicators reflecting sector performance.
Significance of First Advance Estimates of National Income, 2022-23
i.The statistics will be utilized by the Ministry of Finance (MoF) to prepare the budget for the upcoming fiscal year 2023-24 (FY24), which will be presented on February 1, 2023, by Finance Minister Nirmala Sitharaman.
ii.On February 28, 2023, the Second Advance Estimates of National Income for FY23 and quarterly GDP estimates for the quarter October-December, 2022 (Q3 2022-23), as well as the First, Second, and Third Revised Estimates of National Accounts for the years 2021-22, 2020-21, and 2019-20, will be released.
iii.The First Revised Estimates for 2021-22 (the benchmark year) may also result in modifications to the FAE growth rates.
- Improved data coverage, actual tax collections and subsidy expenditures, data revisions made by source agencies, and so on would all have an impact on further revisions of these estimates.
Essential Estimations
i.Real GDP, or GDP at constant (2011-12) prices, is estimated to be Rs 157.60 lakh crore in FY23, compared to a Provisional Estimate of GDP of Rs 147.36 lakh crore in FY22, announced on May 31, 2022.
ii.Nominal GDP, or GDP at current prices, is estimated to be Rs. 273.08 lakh crore in FY23, compared to a Provisional Estimate of GDP of Rs. 236.65 lakh crore in FY22, announced on May 31, 2022.
- The nominal GDP growth rate in FY23 is projected to be 15.4 %, down from 19.5 % in FY22.
iii.The Net National Income (NNI) of India is projected to rise by 6.6 % in FY23 as compared to 8.5 % in FY22.
- This is expected to keep the fiscal deficit as a percentage of GDP at or below the budget estimate of 6.4%.
Key Points:
i.According to a sector-wise analysis of the latest Gross Value Added (GVA) figures, which represent production minus taxes, services have been a key driver of growth while manufacturing has struggled.
- The output of the manufacturing sector is projected to fall to 1.6 % in FY23 from a growth of 9.9 % in FY22.
- Farm (agricultural) sector growth in FY23 is projected to be 3.5%, up from 3.0% in FY22.
- The mining sector is projected to grow 2.4% in FY23, compared to 11.5% in FY22.
- Construction sector growth is projected to be 9.1% in FY23, down from 11.5% in FY22.
ii.The nominal wage growth for the household sector, which makes up 44–45% of GVA, fell to 5.7% in FY17–FY21 from 8.2% in FY12–FY16.
iii.Due to high inflation, real wage growth was almost flat or even negative in some months of FY23.
iv.In FY23, the headline GVA growth is projected to be 6.7%, down from 8.1% in FY22.
v.The 7% GDP projection for FY23 (FY 2022-23) assumes a growth rate of 4.5% in the second half (October-March) of FY23, down from 9.7% in the first half (April–September).
vi.The Indian economy’s GDP growth is anticipated to moderate to around 6.1% in FY24.
- The International Monetary Fund (IMF) has also lowered India’s GDP growth forecast for 2022-2023 to 6.8% from 7.4%.
Recent Related News:
i.In December 2022, the NSO released the Estimates of Gross Domestic Product (GDP) for the Second Quarter (July- September) 2022-23 or Q2FY23.
ii.As per it, India’s gross domestic product (GDP) for the Q2FY23 slowed to 6.3% as compared to the expansion of 8.4% in Q2FY22. It was 13.5% in the April-June quarter of FY23 (Q1FY23).
About the Ministry of Statistics and Programme Implementation (MoSPI):
MoSPI is the nodal agency for the planned and organized development of the statistical system in India.
Ministers of State (Independent Charge) – Rao Inderjit Singh (Gurugram Constituency – Haryana)