The Union Budget for FY23 is likely to assume 13-14 per cent nominal GDP growth despite the growing inflationary concerns. According to finance ministry officials, the assumption of even faster nominal GDP growth may raise inflationary expectations, giving wrong signals to the market.
For FY22, the Budget assumed 14.4 per cent growth in nominal GDP. But the latest first Advance Estimates of GDP for the year released by the National Statistical Office put nominal GDP at 17.6 per cent, with an implicit GDP deflator of 8.4 per cent, signalling that the finance ministry might have underestimated nominal GDP growth for the current fiscal year. The NSO uses a mix of inputs from the consumer price (CPI) and the wholesale price (WPI) indices to deflate nominal GDP to arrive at the real GDP value.
This story is from the January 17, 2022 edition of Business Standard.
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This story is from the January 17, 2022 edition of Business Standard.
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