DMPQ- The estimated growth of 7.53% in ‘nominal’ terms is the lowest since 1975-76. Also, this is the first time since 2002-03 that nominal GDP growth is projected to be in single digits. Why is this a major concern?

National Statistical Office (NSO) released the first advance estimates of the national income that projected growth in India’s GDP at market prices for 2019-20 at 4.98% in “real” terms, the lowest since the 3.89% in the global financial crisis year of 2008-09. But even more significant was the estimated growth of 7.53% in “nominal” terms, which is the lowest since the 7.35% for 1975-76.

This is concern because of the following reason:

The growth rate is against the target of 5 trillion economy by 2024. Minimum growth rate of 12% is required to achieve the target.
It shows slower growth rate of Production and Prices.
Low prices means low salaries and hence low investment.
The low nominal GDP growth rate means low taxes and hence small room for Government to work.
The government will be under more pressure to adhere to the fiscal deficit target.

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