India’s Gross Domestic Product and Its Components

The Latest Quarter At A Glance

Data on India’s Gross Domestic Product for Quarter 1 of the 2023-24 fiscal year has just been published. Here are some highlights:

• Inflation-adjusted Gross Domestic Product was INR 4,037,144.17 crores at constant 2011-12 prices. (A crore is ten million or 10⁷.)
  
• This represents a growth of 7.82 percent compared to the same quarter in the previous fiscal year. (The available quarterly data spans Quarter 1 of the 2011-12 fiscal year through Quarter 1 of the 2023-24 fiscal year. That’s 12 years. Over the past 12 years, GDP has grown 5.59 percent annually.)
• Consumption spending grew 5.97 percent. (Over the past 12 years, consumption spending has grown 5.36 percent annually.)
• Investment spending grew 7.12 percent. (Over the past 12 years, investment spending has grown 5.04 percent annually.)
• Government purchases grew -0.72 percent. (Over the past 12 years, government purchases has grown 5.95 percent annually.)
  
• Exports grew -7.74 percent. (Over the past 12 years, exports has grown 4.34 percent annually.)
• Imports grew 10.1 percent. (Over the past 12 years, imports has grown 4.59 percent annually.)
• Net Exports grew -198.98 percent. (Over the past 12 years, net exports has grown -5.44 percent annually.)
• To sum up the latest quarter, GDP growth was excellent. Rapid growth in investment spending was the highlight. Growth in spending by consumers was average. Government spending, exports and imports were a significant drag on the economy. Spending by the government actually fell, as it has done over each of the last five quarters. Exports fell too, at a very unusual and steep rate. And, to make matters worse, imports grew at an unusually rapid rate.

Gross Domestic Product, Level

Gross Domestic Product, Growth Rate

The Components of GDP (C, I, G, and NX)

GDP is the rupee value of all production, roughly speaking. Consequently, GDP is also total income and total spending. Total spending is usually broken down into four components:

• consumption spending (C, which is present oriented),
• investment spending (I, which is future oriented),
• government purchases (G), and
• net exports (NX = Exports - Imports).

Therefore, GDP = C + I + G + NX. It is important to know which kind of spending – that is, which component of GDP – contributes how much to GDP and its growth. Policy makers may be able to design better macroeconomic policies if they can spot the component that is causing trouble.

There are a dozen charts below, three for each of the four components.

• The first of the three charts for a particular component shows that component’s growth rate over the previous year.
• The second shows that component’s share of total spending (that is, its share of GDP) during the previous year.
• And the third shows the increase in that component over the previous year as a share of the increase in total spending (that is, its increase as a share of the increase in GDP).

Each chart shows the relevant values for each quarter as well as the relevant averages from 2011 onwards.

Consumption Spending

Investment Spending

Government Purchases

Net Exports

Exports

Imports