ASSIGMENT

Siddharth Dhasmana
PGMA2254

What do the GDP numbers for the first quarter released by the National Statistical
Organisation on 31 August 2022, say about the health of the Indian economy? Do they
confirm that the economy has recovered from the multiple shocks of COVID-19
followed by the war in Ukraine and the resulting fuel crisis? Or is there a reason to be
more circumspect?
Analyse the divergence between GDP and GVA. You can also include data from 2020-
21

India's GDP numbers for the April-June quarter of the current fiscal year will be made available to the
public later this evening by the National Statistical Office, which will enable users to assess the
country's rate of economic expansion.
The figures will go into further detail on the growth of several sectors, such manufacturing and
agriculture, in the first quarter of current fiscal year.
Many analysts believe that the base effect will cause the Indian economy to grow at a double-digit
rate. The rating agency ICRA estimates that the GDP would rise at a pace of 13%, however the State
Bank of India anticipated that the GDP will expand at a rate of 15.7% in their report. The GDP
increased at a 20.1% annual pace in the first three months of the previous year.
The Reserve Bank of India forecast that India's GDP will likely rise at a pace of roughly 16.2% in the
first quarter of the current fiscal year during a meeting on monetary policy earlier this month.

The economy's recovery from Ukraine's crisis is less likely than before the outbreak. Russia's invasion
of Ukraine, which has hurt the economy and quality of life, has caused one of the largest migration
difficulties. Trade disruptions and food and gasoline price increases are continuing hurting the global
economy.
These factors increase inflation, making loans harder to receive worldwide. EMDEs in Central Asia
and Europe's primary trade partner, the euro zone, has suffered a severe fall in activity in the second
half of 2022.
This is owing to eroding consumer and business trust, problematic supply networks, and rising
financial limitations. However, greater energy costs and a major drop in Russia's energy supply are
the invasion's worst effects.
The prognosis for the area is quite unclear, thus all EMDEs in Europe and Central Asia have reduced
their growth projections for 2023. A conflict that continues or worsens might cause even greater harm
to the economy and environment, as well as make it more difficult for nations to engage in commerce
and investment. The danger of financial stress continues to be considerable due to high levels of debt
and inflation.

Subsidies drive economic growth, especially in developing nations. Subsidies can be used to
maximise resource allocation and welfare.
Subsidies drive epidemic management. As a result, the Government of India (GOI budget for)'s the
current year incorporates substantially greater subsidies. This is so that the government can assist
individuals in need and abolish all unpaid off-budget subsidies for fuel, fertiliser, and food. Higher
subsidies also increase budget transparency.
However, epidemic-related government subsidies have disrupted the historical equilibrium between
GVA and GDP. GVA growth sometimes lagged GDP growth. On February 26, 2021, the National
Statistical Office announced the Second Advance Estimates of GDP for the years 2020–21 and the
estimates for Quarter 3.
On January 7, 2021, the First Advance Estimates for 2020–21 was initially made public. Estimates of
GVA for 2020–21 was substantially better than the prior FAE predictions (from -7.0% to –6.5%), but
estimates of annual GDP growth were lower (from -7.7% to –8.0%).
The government's policy decisions and the economy's calibrated and gradual opening are to be
credited for the improved GVA index performance.