1 THREAD on national income estimates announced today for Q3 of 2022-23. The abiding message is that the statistical illusion created by the collapse of economy since pandemic is still very much in play. Beware of smoke and mirrors!
2 GDP in 2022-23 is expected to grow by 7% in real terms, GVA by 6.6%. This is a slowdown of 2.1 %age points and 2.2 %age points, respectively.
3 The share of capital formation (GFCF), the prime motor of growth in a capitalist economy, is estimated to increase to 34% of GDP, compared to 31.1% two years earlier. But hold the applause!
4 Both prime motors of the economy GFCF, a proxy for investment in capacity expansion in the economy, and consumption exp (PFCE), are barely in recovery mode since the pandemic. The latest estimates confirms this clearly.
5 GFCF is estimated to increase @ 5.9%/annum b/w 2020-21 and 2022-23, compared to the annual rate of 7.23/annum over the longer period b/w 2016-17 and 2022-23, implying a significant slowdown.
6 Consumption Expenditure (PFCE), that which keeps the economy’s momentum going, is projected to increase only @ 3.27/annum since 2020-21, compared to 5.88%/annum b/w 2016-17 and 2022-23.
7 GDP per capita paints an even more grim picture, that which confirms the widespread apprehension about the collapse of livelihoods since the pandemic. Per capita GDP is expected to be about र1.16 lakhs in 2022-23, compared to र1.082 lakhs in 2019-20, growth of just 2.25%/year
8 Notably, the estimates also reveal that the difference b/w nominal and real GDP and GVA in 2022-23 are 8.9% & 8.6% respectively, implying this is the deflation rate of the two macro variables - effectively the inflation rate. This higher than what the Govt has been telling us!
9 Now, let us turn to the disaggregated figures sectionally and there is more grim news awaiting there. Economic activity in 6 out of the 8 categories that go into the national accounts statistics showed a slowdown in 2022-23 - so much for the chatter of a V-shaped recovery!
10 But the data reveals an even more grotesquely lopsided economy. Output in 5 key sectors out of 8 - Agri/Manufacturing/Construction/Trade/Public Admn &Def - accounting for 73% of national GVA - were in decline.
11 The grotesque twist is given by the fact that only financial Svcs bucked the trend - growing at 6.9% in 2022-23. This sector, usually amiable to the effects of a bubble, is possibly even more inflated - just look at the stockmarkets side the pandemic for evidence!
12 Each of the sectors in the throes of the slowdown have significant implications for employment - especially Agri, Manufacturing, construction and trade - accounting for 3/5th of overall GVA. The shocker is that manufacturing is expected to grow at a measly 0.6% this year.
13 In fact manufacturing output in 2022-23 is just 14.82% higher than the pre-pandemic output (2019-20) - implying an annual growth of just below 5%/year.
14 GVA in Construction, which provides employment, even if low-paid and with insecure terms of employment, grew at just 6.19% per annum since the pandemic.
15 Trade, a sector that hides a large part of India’s disguised unemployment, fared even worse. Output in 2022-23 is expected to be just 4.28% higher in 2022-23, compared to 2019-20 - growth of all of 1.4%/year.
16 I do not think (as do many economists of repute) that quarterly “estimates” are reliable - being more amenable to jugglery by the political masters (not that the rest of the numbers aren’t!!) but also because they are based on fallacious “assumptions”. But here I go:
17 GVA in Q3 of 2022-23 is expected to be just 9.42% above levels attained in the same quarter of 2019-20 (before the pandemic) - an annual increase of just about 3%/annum. To even call this growth would be silly!!
18 Shockingly, GVA in manufacturing in Q3 of 2022-23 is expected to be lower than in Q3 of 2021-22 & just marginally above that in Q3 of 2020-21. That, in any language would be called STAGNATION. That this is all that has been attained in Atmanirbhar Bharat is the supreme irony
19 Consumption (PFCE) in Q3 of 2022-23 is expected to be 14.84% higher than the pre-pandemic (2019-20) level - an annual increase of less than 5%/year.
20 Govt Consumption, which includes not just wages and Govt expenses but crucially also includes subsidies and transfer payments for social welfare - which can have a powerful countercyclical effect in a slowdown - has actually declined.
21 Govt con exp was not just lower in Q3 of 2022-23 than in the previous year, but was LESS THAN 1 %AGE POINT lower than the pre-pandemic year (2019-20), indicating just how niggardly the NaMO regime has been averse to providing support/succour to those who have lost heavily.
22 To sum up:all the motors of the Indian economy are sputtering and talk of a swift recovery, promised time and again by the mandarins at North Block, is just hot air. That despite the manipulations of data, this reality could not be hidden, is just the irony of our times. (END)
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