News Excerpt:

The National Statistical Office (NSO), Ministry of Statistics and Programme Implementation has released the First Advance Estimates (FAE) of National Income for the financial year 2023-24, both at Constant (Base Year: 2011-12) and Current Prices.

Key highlights of the report:

• Real GDP or GDP at Constant Prices in the year 2023-24 is estimated to attain a level of ₹171.79 lakh crore, as against the Provisional Estimate of GDP for the year 2022-23 of ₹160.06 lakh crore. 
• The growth in real GDP during 2023-24 is estimated at 7.3% compared to 7.2% in 2022-23.
• Nominal GDP or GDP at Current Prices in 2023-24 is estimated at ₹296.58 lakh crore, as against the Provisional Estimate of GDP for 2022-23 of ₹272.41 lakh crore. 
• The growth in nominal GDP during 2023-24 is estimated at 8.9% compared to 16.1% in 2022-23.
• The share of private final consumption expenditure in GDP is expected to drop this year to the lowest in at least three years at 56.9% from 58.5% in 2022-23. 
• While the investment rate is likely to pick up to nearly 30% of GDP, driven by government capex and higher consumption growth.
• GVA (Gross Value Added) growth for the farm sector is estimated to more than halve from 4% a year ago to 1.8% this year.
• Manufacturing GVA growth is estimated to accelerate to 6.5% in 2023-24 from just 1.3% a year earlier, while mining GVA is expected to rise 8.1%, from 4.6% in 2022-23.
• The concerning aspect of the GDP data is the weak consumption growth at 4.4%.
• However, these are early projections for 2023-24. 
• Improved data coverage, actual tax collections, and expenditure incurred on subsidies, data revisions made by source agencies, etc., would have a bearing on subsequent revisions of these estimates.

About First Advance Estimates (FAE) of National Income:

• The FAE, which was first introduced in 2016-17, is typically published at the end of the first week of January. 
• They are the “first” official estimates of how GDP is expected to grow in that financial year. But they are also the “advance” estimates because they are published long before the financial year (April to March) is over.
• The main significance of FAE lies in the fact that they are the GDP estimates that the Union Finance Ministry uses to decide the next financial year’s budget allocations.

About the estimation procedure:

• This is indicator-based and is compiled using the benchmark-indicator method, i.e. the estimates available for the previous year (2022-23) are extrapolated using the relevant indicators reflecting the performance of sectors.

• The sector-wise estimates have been compiled using indicators like -

• • Index of Industrial Production (IIP), 

• • Financial performance of Listed Companies in the Private Corporate sector available for Q1 and Q2 of 2023-24,

• • Crop production targets and First Advance Estimates of Crop Production for 2023-24,

• • Production targets and summer season production estimates of Major Livestock Products for 2023-24

• • Fish Production,

• • Production/ Consumption of Cement and Steel,

• • Net Tonne Kilometres and Passenger Kilometres for Railways,

• • Civil Aviation handles passenger and cargo traffic.

• • Cargo traffic handled at Major and Minor Sea Ports,

• • Sales of Commercial Vehicles,

• • Bank Deposits & Credits,

• • Accounts of Central & State Governments, etc., available for the first 6-8 months of the financial year 2023-24.