What is the difference between GVA & GDP?<\/b><\/h5>\n
GDP calculates national income by adding up all expenditures in the economy. On the other hand, GVA calculates the national income from the supply side by looking at the value-added in each sector of the economy.<\/span><\/p>\n The two measures of national income are linked as follows:<\/span><\/p>\n GDP = GVA + Taxes earned by the government \u2014 subsidies provided by the government<\/i><\/b><\/p>\n For instance, if the government earned more from taxes than it spent on subsidies, GDP will be higher than GVA.\u00a0<\/span><\/p>\n But if the government provided subsidies in excess of its tax revenues, the absolute level of GVA would be higher than that of GDP.<\/span><\/p>\n Hence, simply put, GDP provides the demand side of the economy and GVA the supply side.<\/span><\/p>\n In FY21, GDP growth lagged GVA growth as the Centre brought onto the books several years of dues owed to the Food Corporation of India. Food subsidy costs ballooned in one go in a year when tax collections were severely hit due to the lockdown. This created a massive gap between the GDP and GVA.\u00a0<\/span><\/p>\n In FY22, Tax Collections grew at a rapid pace(28%) due to a quick recovery in economic activity, while subsidies, despite remaining elevated, fell by over a third due to the base effect. This resulted in GDP growing 8.7%, while GVA rose just 8.1%.<\/span><\/p>\n Yes. Overall, GDP\u200a tends\u200a to\u200a be higher\u200a than\u200a GVA as tax collections often remain bigger than subsidy payouts.<\/span><\/p>\n Skyrocketing price pressures have forced the Center to announce a slew of measures from tax cuts to additional subsidies, both of which will weigh on GDP in FY23.\u00a0<\/span><\/p>\n Moreover, additional subsidies worth \u20b92.0 trillion would inflate GVA, while fuel tax cuts may pull GDP down unless tax revenue from other channels bridges the gap.\u00a0<\/span><\/p>\n However, the real impact will not be known until the statistics ministry comes out with the second advanced estimate of the GDP next year.<\/span><\/p>\n Source: <\/b>The post is based on the article<\/span> \u201c<\/b>The story behind the GDP-GVA Gap<\/b>\u201d <\/b>published in <\/span>Livemint <\/b>on 1st June 2022.<\/b><\/p>\n","protected":false},"excerpt":{"rendered":" What is the News? According to the data released by the government, the two measures of India\u2019s economy\u2014 \u2018gross value added\u2019 and \u2018gross domestic product\u2019\u2014have grown at widely different paces.\u00a0 What is the difference between GVA & GDP? GDP calculates national income by adding up all expenditures in the economy. On the other hand, GVA… Continue reading The story behind the GDP-GVA Gap<\/span><\/a><\/p>\n","protected":false},"author":10317,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1566,3127,9],"tags":[10501],"class_list":["post-187548","post","type-post","status-publish","format-standard","hentry","category-daily-factly-articles","category-economy","category-public","tag-live-mint","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/187548","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10317"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=187548"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/187548\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=187548"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=187548"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=187548"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}What explains the gap between GDP & GVA?<\/b><\/h5>\n
![\"GDP](\"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2022\/06\/photo_2022-06-01-14.47.27.jpeg?resize=470%2C277&ssl=1\")
Was the GDP & GVA gap there before FY21?<\/b><\/h5>\n
Will the GDP-GVA divergence continue?<\/b><\/h5>\n