Increased the Annual Average GDP Growth Rate of India

Gross Domestic Product (GDP) is calculated by adding total consumption, investment, government spending, and net exports to the economy’s total output as a whole. It estimates GDP over a set period, providing a reliable estimate of total income for the economy. Similarly, if a country’s total GDP is divided by its population, its GDP per capita can be calculated, which plays a significant role in the GDP growth rate calculation in a country’s economy. 

If the size of the economy in the first quarter of 2019-20 is measured at constant prices in real terms, it will be roughly Rs 35.67 trillion or Rs 35.67 lakh crore. The Covid-19 pandemic was witnessed in the first or April-June of 2020, causing this figure to drop to Rs 27 lakh crore, then to Rs 32.38 lakh crore in April-June of 2021-22.

GDP Growth by Country

The Gross Domestic Product (GDP) estimates for April-June, the first quarter of 2021-22, were announced by the National Statistical Office (NSO), Ministry of Statistics and Program Implementation, showing an increase of 20.1% in GDP. In April-June 2020, the economy experienced a 4.4% drop. In this respect, the increase in the growth rate indicates a reduced base impact. In addition, for the first quarter of 2021, a growth rate of roughly 17 to 18% was predicted.

A growth rate of 20.1 was seen, which was significantly better. Aside from that, compared to the growth rate from January to March, the size of GDP decreased by 17%. When we look at the size of the economy in the first quarter of 2021-22, we can see that the GDP in the January-March period was higher than the economy, which was not rising even on a sequential basis.

When will India’s economy regain its former prominence?

The Reserve Bank of India projects that real economic growth will be 9.5% in 2022 and that the economy will be able to reach its pre-pandemic size of GDP by 2022-23, when the Indian economy is in the process of renewed growth.

GDP growing rate formula

GDP is calculated using the following formula:

Y = C + I + G + (X − M)

• C here denotes consumption, which includes services, non-durables and durables.
• G represents government expenditure, which includes salaries of employees, construction of roads and railways, airports, schools and expenditure on the army.
• I denote the expenditure that consists of expenditure on housing and equipment.
• The difference between total imports and exports is called net exports, denoted by (X-M).
• Here Y stands for Gross Domestic Product.

GDP Growth Rate Calculation Methods

These three methods help to calculate the GDP growth by the country:

1. Income Approach

It is computed on the basis of income earned through the production of goods and services, in which all factors of production in the economy earn income. It also includes the output of the final product or service, which is called the producer’s input. 

GDP=Total National Income +Sales Taxes+Depreciation +Net Foreign Factor Income

2. Expenditure Approach

This is the exact opposite of the income approach, which starts with money spent on goods and services. We also measure the overall expenditure on goods and services made by all entities within the country’s domestic borders.

GDP= Consumption Expenditure + Investment Expenditure + Government Expenditure +   Exports minus Imports (EX-IM)

3. Output (Production) Approach

Here the monetary or market value of all goods and services produced within the borders of the country is measured, in which GDP or real GDP is calculated at constant prices to avoid distorted measurement of GDP, which are due to price expansion.

GDP (as per output method) = Real GDP (GDP at constant prices) – Taxes + Subsidies

Challenges in accomplishing this goal include:

Employment

Employment is required to attain the desired level of consumption in the economy, which necessitates a substantial increase in demand. To make this possible, the country’s employment conditions must improve.

Consumption 

In the economy, private consumption is primarily assessed by private final consumption expenditure, which appears to expand continuously but has not yet reached the required level. Private consumption accounts for around 55% of India’s overall GDP, which should grow quicker if the economy is to develop at all.

Investment

It is also vital to maintain ongoing demand in the economy, which requires a rise in investment.

Is a double-digit growth rate possible in 2021-22?

If we look at the current state of the country’s economy, we can see that the economy is growing at a slower pace than in the previous quarter, owing to the speed with which vaccines are being administered and the fear of a third wave, as a result of activities such as the Covid-19 pandemic, which has affected Indians. For 2021-22, the economy is expected to grow at a rate of roughly 8.9%.

Conclusion

The Indian economy will eventually restore its position, and the government is working hard to achieve this. India’s economy will almost certainly grow at a double-digit rate, making it the world’s largest economy. According to the Reserve Bank of India, there has been an adverse effect on retail pricing due to double-digit wholesale inflation, but this is due to an unusual circumstance that is likely to recover shortly.