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GDP data for Quarter 2 Financial Year 2022-23

India's economic growth data for the second quarter (2022-23 or FY23) of the current fiscal year were released on 30 Nov. by the Ministry of Statistics and Programme Implementation (MoSPI). The three months of July, August, and September are referred to as the second quarter, or Q2. On an annual basis, India's GDP increased by 6.3% in the second quarter. In other words, it exceeded the GDP for the same months in 2021 by 6.3%.

India's Gross Value Added (or GVA) increased in Q2 according to the MoSPI. 5.6 percent compared to the previous year.

GDP vs GVA

The GDP calculates the monetary value of all final goods and services produced/rendered in a nation over a specified time period.

The same national income is calculated using the supply side by the GVA. It is done by totaling the value added across all industries.

The GVA data

GVA in manufacturing fell by 4.3% in Q2. This is important because manufacturing has a great potential for job growth and can absorb extra labour from the agricultural industry. In the three years since the Covid pandemic, manufacturing GVA has only increased by 6.3% as a result of the contraction.

Indian manufacturing has been struggling to add value, this explains why data from the Centre for Monitoring Indian Economy (CMIE) shows that jobs in the manufacturing sector halved between 2016 and 2020.

The growth of services like commerce and hotels, etc., was 15%. This is a huge sector for job growth. However, if one compares the Q2FY23 level to the pre-Covid level (Q2 of FY20), the growth is only slightly higher than 2%.

Another sector crucial for job creation, even though it is smaller in terms of overall contribution to India’s GVA, is mining and quarrying. It, too, has contracted by almost 3%. Looking back over the past six years, it has contracted by 3.5% between FY17 and FY20 and grown by just 2.5% since then.

One positive sector emerging from the GVA pertains to agriculture (along with forestry and fishing), which has grown at 4.6%. Typically, this is a good growth rate for this sector and has happened despite some worries that the sowing of crops did not happen in time.

Overall, while the GVA has grown by 5.6 per cent year on year, the growth is just 7.6 per cent when compared to the pre-Covid level set in FY20.

The GDP data

On the GDP side, the biggest engine of growth is private consumption expenditure. It typically contributes over 55% of India’s total GDP. This component is also crucial because if this is depressed, it affects businesses of any incentive to make fresh investments; and expenditures towards investments. Data shows that private consumption has grown by a healthy 9.7 per cent over the past year.

The biggest surprise though from the GDP is the contraction in government final consumption expenditures. While these types of expenditures account for just about 10-11% of the GDP, they have the ability to prop up an economy during tough times when people and businesses hold back spending. Data shows that not only did government consumption expenditure contract by 4.4% per cent in Q2 (over the Q2 of 2021), but that it is almost 20% below the pre-Covid level.

The last component of the GDP equation is the Net Exports data. Since India imports far more than it exports, the Net Exports value is negative.