THE GIST of Editorial for UPSC Exams : 04 March 2020 [Bottom or mirage?: On NSO estimates of GDP growth (The Hindu)]

Bottom or mirage?: On NSO estimates of GDP growth (The Hindu)

Mains Paper 3: Economy
Prelims level: GDP growth
Mains level: Highlights the key components of the GDP growth revival

Context:

• National Statistical Office (NSO) estimates of Gross Domestic Product (GDP) have pegged growth at 4.7% in the October-December 2020 period.

GDP:

• GDP is the total market value of all the finished goods and services produced within a country's borders in a specific time period.
• As a broad measure of overall domestic .....................

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Why the estimate has pegged?

• The estimate for the GDP growth of the October-December quarter has pegged as it is a demand-filled festival season.
• This estimate is a distinct slowdown from the revised year-earlier and preceding quarters’ 5.6% and 5.1% paces respectively.

What are the sectors that saw drag?

• Manufacturing contributes under a fifth to gross value added (GVA).
• But, this sector saw the biggest drag posting a 0.2% decline and extending the sector’s contraction into a second straight quarter.
• Output at electricity and allied utility services shrank 0.7%, reflecting lack of demand from becalmed factories.
• Activity in construction softened worryingly to a 0.3% expansion, prolonging the industry’s slowdown for a third consecutive quarter.

What are the sectors improved?

• Agriculture and the three largest ..............................

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Centre’s role:

• The Economic Affairs Secretary cited an improvement in output at the 8 core industries as an uptick in momentum.
• So, the Centre was quick to assert that the economy appeared to have “bottomed out”.
• The overall growth at the 8 industries that include coal, steel, cement and electricity averaged 2.2% in January 2020.
• This growth was propelled by an 8% increase in coal production.
• The survey-based India Manufacturing Purchasing Managers' Index (PMI) of IHS Markit for February 2020 pointed to an improvement in manufacturing, clearly a positive sign.

Key components of GDP reveal:

• The key components of GDP are private final consumption expenditure (PFCE) and gross fixed capital formation (GFCF).
• A closer look at the actual numbers for PFCE and GFCF across the three quarters belies hope that the economy is out of danger.
• A downward revision of data for 2018-19 have lent a statistical boost of 0.6 percentage point to the 1st and 2nd quarter GDP growth estimates.
• Disconcertingly the ......................................................

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Way forward:

• Automobile sales are still floundering.
• The consumer confidence survey by the RBI points to a fall in non-essential consumption.
• The impact of the corona virus outbreak on global demand is yet to be factored in.
• Due to all these factors, the bottom may still be some distance away.

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Prelims Questions:

Q1. With reference to the pigmentary disorders, consider the following statements:
1. Physiological pigmentation is a critical defense mechanism by which skin is protected against harmful UV radiations.
2. Pigmentary disorders (both hypo and hyper pigmentary) are considered a social stigma.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

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Mains Questions:
Q1. Why do the GDP estimate has ..........................................?

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