New NSO Data: GDP Growth in India

The National Statistical Office (NSO) has released new data on India’s annual and quarterly national income, providing a final assessment of the impact of the COVID-19 pandemic on the country’s GDP growth. The most recent data and sector performance, highlighting areas of growth and contraction.

Recovery from the pre-COVID year

  • Advance estimates: The NSO’s second advance estimate (SAE) shows a contraction of (-) 5.7% in 2020-21, which is lower than the FAE’s (-) 7.7%.
  • Manufacturing, construction, and financial sectors benefited the most from the revised estimate.
  • GDP growth: Real GDP in the COVID-19 fiscal year was 136.9 lakh crore, up from 134.4 lakh crore previously estimated. In 2021-22, GDP increased by 9.1%, and in 2022-23, it increased by 7%.
  • Negative growth in 2020: Between 2019-20 and 2022-23, the compound annual average growth rate was 3.2%. In comparison to other countries, including China, Bangladesh, and Vietnam, India’s growth rate in 2020 is negative.

Sector-wise Performance

  • Overall GVA in 2022-23 is 11.3% higher than in 2019-20.
  • The mining and quarrying sector is still contracting at (-) 0.3%.
  • Trade, hotels, and transportation, for example, show a 4.3% increase.
  • The construction industry is growing at a faster-than-average rate of 18.6%.
  • The manufacturing sector is also growing rapidly, at 14.8%.
  • Financial, real estate, and other sectors grew at a 14.3% annual rate.
  • Agriculture grew at a 12% annual rate.
  • Government final consumption expenditure (GFCE) increased at a 7.4% annual rate.
  • Gross fixed capital formation (GFCF) and private final consumption expenditure (PFCE) rose 17.7% and 13.1%, respectively.

Capital Investing and Capacity Utilization

  • The nominal ratio of gross fixed capital formation to GDP increased to 29.2% in 2022-23 from 28.6% in 2019-20.
  • Real investment rates increased from 31.8% in 2019-20 to 34% in 2022-23.
  • The estimated incremental capital output ratio (ICOR) fell from 8.5 in 2019-20 to 4.9 in 2022-23.
  • The manufacturing sector’s capacity utilisation ratio was only 70.3% in 2019-20, but it increased to 73.5% in the first half of 2022-23.
  • Growth that is subdued implies lower capacity utilisation and a higher ICOR.

Quarterly Growth and Forecasts

  • Real GDP growth in Q3 2022-23 fell to 4.4% from 6.3% in Q2 and 13.2% in Q1.
  • The third-quarter growth rate and the expected fourth-quarter growth rate are both quite low.
  • High frequency indicators indicate increased economic activity.
  • In January and February 2023, the PMI manufacturing remained above its long-term average.
  • PMI services have increased to a near 12-year high.

@the end

The latest NSO data on India’s GDP growth provides a final assessment of the COVID-19 pandemic’s economic impact. According to NSO data, India’s economy is recovering from the COVID-19 pandemic, albeit at a slower pace.

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