GDP Deflator Forecast for FY23

On February 10, 2022, Finance Minister Nirmala Sitharaman highlighted that, for 2022-23, Centre’s gross domestic product (GDP) deflator projection is 3 to 3.5 per cent.

Key Facts

Government’s own real GDP growth projection for fiscal year 2022-23 is in the range of 7.6-8.1 per cent, while Union Budget assumes a nominal GDP growth rate of 11.1 per cent for fiscal year 2023.

GDP projection in the Budget

GDP Projection in the Budget is based on advance estimates of ‘National Statistical Office’. Government’s nominal GDP estimate is 11.1 percent, as advance estimates were released before Omicron wave. The Budget does not provide real GDP estimates. Economic Survey 2021-22 projected a real GDP growth rate of 8-8.5 per cent in FY23.

What is GDP Deflator?

GDP Deflator is also known as ‘implicit price deflator’. It is a measure of general price inflation. It is defined as ‘difference between nominal GDP and real GDP’. It is calculated by dividing nominal GDP by real GDP and multiplying it by 100.

Nominal GDP

It is the market value of goods and services which are produced in an economy. This value is unadjusted for inflation. Nominal GDP is measured at current prices.

Real GDP

When nominal GDP is adjusted for inflation, it is called as Real GDP. It is done to reflect changes in real output. This GDP is measured at constant prices.

Which ministry comes out with GDP deflator?

Ministry of Statistics and Programme Implementation (MOSPI) comes out with GDP deflator. Base of the GDP deflator is revised when there is any change in base of GDP series.

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