Central Idea

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

Recovery since pre-COVID year

Advance estimates: NSO’s second advance estimate (SAE) shows a contraction of (-) 5.7% in 2020-21, lower than its first advance estimate (FAE) at (-) 7.7%.
Benefited sectors: Manufacturing, construction, and financial sectors benefited the most in the revised estimate.
GDP growth: Real GDP in the COVID-19 year amounted to ₹136.9 lakh crore, higher than the earlier assessment of ₹134.4 lakh crore. GDP grew by 9.1% in 2021-22 and 7% in 2022-23.
Negative growth in 2020: The compound annual average growth rate between 2019-20 and 2022-23 was 3.2%. Comparison with other countries, including China, Bangladesh, and Vietnam, shows India’s negative growth rate in 2020.

Advance estimates refer to the preliminary projections made by the government regarding the likely economic growth, inflation, or other macroeconomic indicators of a country for a given period. These estimates are usually released a few months before the actual data for the period becomes available.
Advance estimates are based on various economic indicators such as industrial production, agricultural output, exports, and consumption expenditure, among others. These indicators are used to extrapolate the economic activity for the full period, based on which the government makes its initial projections.

Overall GVA in 2022-23 is higher by 11.3% compared to 2019-20.
Mining and quarrying sector still shows a contraction at (-) 0.3%.
Trade, hotels, transport, etc., show weak growth of 4.3%.
Construction sector shows higher-than-average growth at 18.6%.
Manufacturing sector also shows robust growth at 14.8%.
Financial, real estate, etc., grew at 14.3%.
Agriculture sector grew at 12%.
Government final consumption expenditure (GFCE) grew at 7.4%.
Gross fixed capital formation and private final consumption expenditure (PFCE) increased by 17.7% and 13.1%, respectively.

Gross fixed capital formation to GDP ratio in nominal terms increased to 29.2% in 2022-23 from 28.6% in 2019-20.
Real investment rates increased to 34% in 2022-23 from 31.8% in 2019-20.
Estimated incremental capital output ratio (ICOR) decreased to 4.9 in 2022-23 from 8.5 in 2019-20.
Capacity utilization ratio in the manufacturing sector was only 70.3% in 2019-20, but it increased to 73.5% in the first half of 2022-23.
Subdued growth implies lower capacity utilization and higher ICOR.

Q3 2022-23 saw a decline in real GDP growth to 4.4% from 6.3% in Q2 and 13.2% in Q1.
Growth rate in Q3 and expected growth rate in Q4 are quite low.
High frequency indicators point towards improved economic activity.
PMI manufacturing in January and February 2023 remained above its long-term average.
PMI services increased to a near 12-year

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

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