On September 20, 2020 Krishnamurthy Subramanian, chief economic advisor in the finance ministry, Government of India informed that as per the estimate of finance ministry, India’s nominal Gross Domestic Product(GDP) is expected to grow by 19% in FY22(2021-22) on a low base.
NK Singh, chairman of Fifteenth Finance Commission (FFC) stated that this estimate is a bit moderate when compared with some estimates received from experts.
Note– Some experts had estimated that nominal Gross Domestic Product(GDP) could be 21% as an extreme case and others stated it could be more modest.
Nominal GDP of 1st Quarter of this financial year
The nominal GDP in the 1st quarter of this financial year contracted by 22.6% to Rs 38.08 lakh crore compared to Rs 49.18 lakh crore in the same period last year.
The Economists have warned that although the rebound in FY22 appears to be strong, the GDP may still be behind the record for the year ended March 31, which was estimated to be Rs 203.4 lakh crore by the National Statistical Office.
No expenditure Projections for FY22 and FY23
i.The finance ministry stated that it will not be able to submit Medium Term Expenditure Framework with targets representing expenditure of FY22 and FY23 as mandated under the FRBM (Fiscal Responsibility and Budget Management) Act, 2003.
ii.This is because reliable projections of GDP growth cannot be obtained due to the continuing impact of COVID-19 pandemic on the Indian economy.
iii.It is to be noted that the government makes expenditure projections every year under the provisions of Section 7(3)(b) of the FRBM Act, 2003.
Note– The Reserve Bank of India(RBI) is expected to release its own growth forecast on October 1.
What is Nominal GDP?
It measures a country’s gross domestic product (GDP) using current prices, without adjusting for inflation.
- As per the latest forecast of Moody’s, India’s real GDP growth is projected at 10.6% and a 4% CPI inflation for FY22, after an 11.5% contraction in the current fiscal(FY20-21).
- Goldman Sachs Group Inc expects a 14.8% contraction in GDP for the year through March 2021, while the Asian Development Bank(ADB) forecasted a contraction of 9%.
Recent Related News:
In a meeting with the 15th Finance Commission the Union Health Minister Harsh Vardhan highlighted that the government aims to gradually increase the public health expenditure to 2.5% of Gross Domestic Product(GDP) by 2025.
About Ministry of Finance
Union Minister– Nirmala Sitharaman(Constituency- Rajya Sabha,Karnataka)
Minister of State– Anurag Singh Thakur